1st
Nov 2024
Stamp Duty Hike Hammers Smaller Landlords Thousands Of BTL Purchases Will Be Ditched
A mortgage chief has issued a stark warning that in all probability thousands of buy to let purchases may now be ditched caused by midnight’s hike in stamp duty on additional homes and BTL purchases from 3% - 5%
Peter Stimson from MPowered Mortgages says: “Buy-to-let landlords and second home owners were expecting another tax squeeze from the Chancellor. But what they got was a whack with a hammer.
“Not an increase in general taxation or the Capital Gains Tax they pay when selling a rental property, but a whopping 2% uplift in the Stamp Duty payable when buying a home to rent out. A sector rendered fragile by successive tax raises and interest rate rises is now likely to be clinging on by its fingernails after today’s announcement.
“Fewer than one in 10 mortgage applications made this year were for a buy-to-let loan, less than half of what it was just a few years ago. That share is now likely to plunge further as would-be landlords run the numbers and decide they just don’t stack up.”
He continued: “The irony is that it’s not just landlords who will feel the pain. A third of Britons don’t own their own home, and for many of them, renting privately is the only option. With rents already rising and the supply of rental properties about to be further disrupted, rents could now climb even higher. Far from solving the housing crisis, this, at least in the short term, could well exacerbate it.”
Paul Johnson, director of the Institute for Fiscal Studies think tank, said renters will have to "pay part of the cost" of the hike in stamp duty for landlords and second-home buyers "as the supply of such properties falls".
An online property website warns it is most likely there will be a nose-dive in demand
Richard Donnell, head of research and insight at the portal, says: “Changes to stamp duty land tax, together with higher property prices, has seen stamp duty raise over £11.5 billion in 2023/23. It’s a tax that falls most heavily on buyers in southern England with London and the South East accounting for over 50 per cent of annual tax receipts from stamp duty.
“The extra 2% cost on buying second homes and investment property will reduce demand from second home buyers and investors. Second home buyers are already responding to last year’s Budget which allowed councils to charge double council tax for second homes. This is resulting in a higher level of selling by second home owners. In areas with above average second homes we have seen four times more homes come to the market.
“This announcement also comes with changes announced previously which will see first time buyers pay more from next year. A return to previous stamp duty thresholds from
The only solace from Reeve’s attack on the PRS is that she didn’t raise CGT for landlords.
He says: “It’s positive to see that capital gains tax has not increased for landlords (already 24 per cent for higher rate taxpayers).
“The private rented sector has seen static supply since tax changes introduced in 2016 and there is a steady net selling by landlords in response to tax policy but also greater regulation of housing and higher mortgage rates. We need to keep as many landlords as possible in the market to provide choice for renters facing limited choice and to prevent rents rising faster than earnings, which hits those on low incomes the hardest.”
Richard Merrick of PIMS, says: ” And now we have a Governmental Two Tier attitude towards the PRS, hit the smaller landlords hard who wanted to purchase new properties many of which will not go ahead, and slowly but surely giving the keys to Corporates in taking over the sector.”
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