EYE NEWSFLASH: Stamp duty increases from tomorrow on second homes

The chancellor Rachel Reeves has just announced in her Budget statement that the stamp duty surcharge on additional homes will increase by 2% from tomorrow.

Consequently, the stamp duty surcharge will rise from 3% to 5% which will hit landlords’ profits, and that is likely to deter more people from investing in the BTL market and thus potentially reduce further the supply of much-needed private rented stock.

Faye Church, senior financial planning director, Rathbones Group said: “The decision to increase stamp duty land tax from 2% to 5% from tomorrow will have an impact on the private rented sector. Assuming an average holding period of 10 years, this would add £4,780 to the cost of buying an average UK flat or maisonette which costs around £239,000 according to Land Registry data. Designed to be a tax on the wealthy, it is in fact the opposite; landlords are likely to  pass this on to tenants costing them extra rent of £40 per month or £480 per year.”

Lucian Cook, head of residential research at Savills, commented: “Any relief buy-to-let landlords and second homeowners may have felt from seeing their exposure to capital gains tax unchanged will have been very short-lived given an increase in the SDLT surcharge.

“The risk is that it further constrains the supply of private rented accommodation, keeping upward pressure on rents. New buy-to-let investors will be very thin on the ground, and even existing larger, wealthier, landlords, will think very carefully about whether they continue investing.

“That means there will be a thinner seam of demand and fewer options for those looking to exit the sector.”

The CEO of OpenBrix, Adam Pigott, added: “An increase in stamp duty on second home purchases will leave a sour taste, as it will see an increase in costs for those looking to invest within the sector, although it’s unlikely to deter them from doing so.”

 

Property industry reacts to the Autumn Budget 2024

 

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