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Buy-to-let lanlords suffer stamp duty hike

Buy-to-let landlords have been dented by the government’s 3% stamp duty increase. Property investors were named the ‘biggest losers’ as the government makes the property market more attractive.

Higher rates of stamp duty will see a 3% hike on additional residential properties, such as buy-to-let properties and second homes, from next April. The government will use this additional tax to invest in supporting their housing agenda and doubling the housing budget.

George Osborne made the announcement during his spending review speech. “This extra stamp duty raises almost a billion pounds by 2021 – and we’ll reinvest some of that money in local communities in London and places like Cornwall which are being priced out of home ownership.”

However, the government will consult whether the exemption for corporates and funds owning more than 15 residential properties is appropriate. AccountingWEB member WhichTyler smirked at the exemptions: “15 residential properties is probably within some BTL portfolios, so expect the BTL lobby to campaign for the threshold to be lowered so they are not too hard hit.”

Buy-to-let landlords are likely to feel the squeeze of this new measure as the government attempts to make stepping onto the housing ladder more attractive.

Tina Riches, national tax partner at Smith & Williamson, said: “This will be a further nail in the coffin of the buy-to-let market. The government is rightly keen to ensure that as many individuals as possible can buy their own homes, however, it is going to be difficult for those who have given up other jobs and invested in this market. Besides, in the short term, rents are likely to go up making it very hard for first time buyers to save.”

Landlords who are not already in the process of reviewing their portfolios will need to do so before long. Jo Bateson, KPMG tax partner, warned investors may wish to “re-evaluate the attractiveness of the residential market” ahead of this announcement coming into effect from next April. There are a number of important issues still to be addressed such as precisely how the stamp duty changes will be applied: What is the definition of a second home, and what is the position of a purchaser who is at first unsure how it might be used?”