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Revealed - how buy to let provides government with huge tax take

Anyone who thought the buy to let sector’s recent anger at higher government taxes may have been misplaced may wish to look at figures which show the stamp duty paid on investment properties purchased in the third quarter of 2016.

Data from HMRC shows that one in four properties bought in the third quarter of this year was a second home or buy to let; of the 235,000 property transactions incurring any stamp duty, now fewer than 56,100 were BTLs or holiday properties attracting a stamp duty surcharge drawing in another £44m. 

HMRC has so far this year made £670m from buy to let and second homes, despite most of these so-called "additional properties" actually costing less than £250,000 and so attracting minimal or no stamp duty.

This appears to fly in the face of pessimistic observers who feared the surcharge would kill off demand for additional homes.

“While landlords are the ones paying the tax, it is in fact tenants that are footing the bill in higher rents. If the government’s aim is to provide a home for all, taking £700 million from hardworking tenants is a self-defeating move” says a spokesman for ARLA.

Legal & General Mortgage Club director Jeremy Duncombe says: “Given the turbulence in Britain’s political landscape in the last six months, it’s reassuring to see that today’s statistics have not shown a drastic drop in transaction numbers. It is comforting to see that the number of property transactions under £250,000 is continuing to rise even if higher value property transactions have declined year on year.”

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    • M C
    • 31 October 2016 07:46 AM

    Please could someone post where this HMRC data is available? (showing "one in four properties bought in the third quarter of this year was a second home or buy to let")
    Thanks

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    M C .. Property Stats is my living .. here they are my friend https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/562502/Quarterly_SDLT_Oct_2016_circ.pdf

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    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/562502/Quarterly_SDLT_Oct_2016_circ.pdf

    this one works

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    it keeps chopping it .. try this *(you will need to cut and paste)

    https://goo.gl/P2ZYNg

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    • M C
    • 31 October 2016 09:06 AM

    Many thanks Christopher, much appreciated

     
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    What I would find interesting is what percentage of landlords that are apparently continuing to buy are actually overseas based. The Chinese are lining up to buy UK residential property because of the exchange rate, and I would assume that other non-domiciled parties are too. What effect will this have on the rental market when it is harder to keep overseas landlords operating within the rules?

  • Mark Hempshell

    Exactly. Govts recent policies are putting property in the hands of a different kind of investor, which may bring its own set of problems in future.

  • David OConnor

    The 3% surcharge applies to the whole value so the fact that many were below £250,000 is irrelevant!

    Institutional / bulk purchase investors can ‘not’ pay the surcharge; this is likely to be the reason the 'so called' units do not equate to the amount collected.

    And that will be why these figure do not reflex the normal resale business that most agents see. As without a doubt 'normal' investors are significantly reduced.

    Also investor who 'did up' 'run downs' are much reduced as the stamp duty surcharge reduces the marginal in many cases to zero.

    The stamp duty policy is flawed on every level.

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    An increasing amount of sh*t will hit the fan as time progresses with 2019 being just bout the worst it can get. Then higher rate taxpayers will make nothing if their property has any decent amount of loan charge against it, and landlords aren't in the market to make a loss.

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