There’s been an angry reaction from letting agents and landlords to the shock news that an additional three per cent stamp duty is to be put on buy to let and second homes.
George Osborne made the surprise announcement in his Autumn Statement, alongside a pledge to encourage a vast house-building programme and to extend the Help To Buy programme by a year to 2021.
Some £1 billion which he believes the new stamp duty will raise by 2021 will fund some of the new homes, Osborne says.
Lucian Cook, head of research at Savills, says this is merely the latest tax burden to fall disproportionately on London buyers and investment landlords. ”This will further suppress transactions and prices in the prime central London market, given the extent to which this market has been supported by purchases from second home owners and investor buyers. More generally, buy to let investors are likely to display greater caution faced with higher transaction costs. This is likely to be greatest among those with substantial debt who are also affected by the changes to tax relief that were announced in the July budget” he says.
Jonathan Adams, director of prime central London agency Napier Watt, says: “Buy to let mortgage holders will potentially have to pay up to 15 per cent stamp duty on future purchases and lose out on mortgage interest tax relief. The result? Fewer landlords will come into the market, there will be a lack of supply and rents will rise. The other issue is that because the stamp duty hike won’t come in until April, we could see a rush of landlords buying before then, further pushing up prices in the short term.”
There has also been a bitter response from the chief executive of the National Landlords Association, Richard Lambert, who says: “The Chancellor’s political intention is crystal clear; he wants to choke off future investment in private properties to rent. If it’s the Chancellor’s intention to completely eradicate buy to let in the UK then it’s a mystery to us why he doesn’t just come out and say so”.
Alan Ward, Chairman of the Residential Landlords Association, adds: “The biggest losers are tenants who will now find it even harder to get the accommodation they want at a price they can afford. The extra stamp duty on buy to lets will exacerbate an already serious shortage of properties in many areas reducing choice and driving up rents.”
“This is penalising London workers who have a pied-a-terre from Monday to Thursday throughout the week and return to the family home during the weekend” says Faisail Durrani, head of research at Cluttons.
“This additional SDLT will hit confidence in the London market, at a time when emerging market currencies are under tremendous pressure due to the faltering of global economic growth. It’s a double whammy for international buyers because taxes will increase and weaker currencies mean UK investment properties are more expensive” he says.
“The increase in stamp duty, while good for first time buyers, could have quite a negative impact on buy to let investors and subsequently the rental market. 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” says Jamie Lester of Haus Properties, a three-office south west London estate agency.
“This is short-sighted by the government as they have failed to address the slowdown at the top-end of the market ... The Chancellor could have put new, fairer stamp duty levels in place as so many London family homes, even in secondary areas, breach the £1.5m+ barrier” suggests Robin Paterson, chairman of Sotheby’s International Realty UK.