30th
Nov 2015
The whole PRS sector is outraged by the Chancellor’s increase in stamp duty charges for BTL properties and second homes.
Osborne announced in parliament on Wednesday 25th November, that landlords and second home owners will face an extra 3% stamp duty effective from April 2016.
A north London estate agent, Jeremy Leaf called the government’s intention as “demonstrating practical naivety”.
“Many buy-to-let investors underpin some of the bigger developments in particular. There is a danger that it will kill the market and result in some developments not happening at all,” he said, “Landlords will either sell or not add to their portfolios at a time when we need more affordable accommodation. Such a move inevitably puts extra upward pressure on rents.”
Jamie Lester, head of an estate agents chain, agreed with the comment and said: “This may ultimately lead to a shortage of good quality properties or an increase in rent, which could make it much more difficult for tenants.”
The 3% additional charge will be slapped on all of the stamp duty bands above a £40,000. It will mean that landlords wishing to purchase a buy-to-let property over £275, 000, will have to pay more than three times the amount of the existing duty of £3,750 as it will become £12,000 from next year.
Many property experts expect there to be a rush of BTL and second home purchases to go through before the April deadline.
Doug Crawford, CEO of an online conveying service, said: “The stamp duty changes will turbo-charge the housing market over the next four months as buy-to-let landlords and holiday home buyers race to beat the deadline before the changes bite in April. This will inevitably push up property prices in the short term, especially in locations popular with buy-to-let investors, such as London.”
The stamp duty increase comes on top of the news that landlords will have to cough up their Capital Gains Tax from the sale of a residential property within four weeks of the completion date, effective from April 2019.
It is no wonder the industry feels that the sector is facing a full frontal attack from the Chancellor, especially as the ‘wear and tear’ allowance of 10% tax relief is due to be replaced by relief on all receipted payments for such work.
Richard Merrick of PIMS, said: “The PRS is providing affordable housing and is doing so because this and previous governments have failed in delivering the new builds required to keep the housing crisis in check.”
He added: “The concerted attack on the sector will mean that fewer people will have any hope on getting onto the housing ladder, as their rents will have to be increased because of the government’s actions.....and not forgetting the sudden surge in BTL and second home purchases, will further inflate prices out of many renters’ pockets. ”
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