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Investors won't be deterred by stamp duty surcharge, say agents

The proposed stamp duty surcharge on the purchase of second homes and buy-to-let properties will fail to deter landlords from expanding their portfolios, according to Jackson-Stops & Staff.

The agency says that for the majority of investors, property price inflation will more than compensate for their increased stamp duty bill.

Jackson-Stops & Staff has carried out a detailed analysis which shows that in the South East, for example, the annual capital gain for an average property will be £28,412, while the stamp duty on the purchase of an averagely priced buy-to-let or second home in the same region will be just £11,328 after April 1.

The report suggests that purchasers of an averagely priced buy-to-let home in London will still benefit from an annual capital gain of over £40,000, even taking into account the extra 3% of stamp duty to be paid.

"Our message to landlords is that when you do the sums, and look at the direction of house prices, placing money in bricks and mortar is still by far the best investment vehicle," says Nick Leeming, chairman at Jackson Stops & Staff.

"The idea that the stamp duty tax will act as a deterrent is a fiction, as for most landlords it won’t amount to a significant figure. In fact, the only losers will be tenants as landlords are likely to pass on any additional costs they might not want to shoulder to their tenants by increasing rents," he adds.

Another agency, Carter Jonas, echoes Jackson-Stops & Staff's sentiment. 

It says that stamp duty should not be the deciding factor for landlords looking to make a property purchase after April 1.

"The stamp duty change only takes investors roughly back to where they were before Chancellor George Osborne altered the way the tax was levied at a stroke during his 2014 Autumn Statement,” says Lisa Simon, Carter Jonas' head of residential lettings. 

“It’s better to take a long-term view and survey how the property market has performed where you want to buy. There are other things to consider, too, such as affordability and the way write-down will affect offsetting some charges for things like furnishings."

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