A prominent lettings agent claims landlords are relieved that Capital Gains Tax is unchanged and that the stamp duty hike for buy to lets is “less of a concern.”
Marc von Grundherr, the director of Benham and Reeves agency, commissioned a survey of landlords in England following last week’s Budget and found that around one in five had put their buy-to-let investment plans on hold in the run up to the statement, fearing a CGT rise.
Some 22% stated that had the government chosen increased CGT, they would have reduced the size of their portfolio.
As a result of the ‘no change’ decision on Capital Gains Tax, 84% of landlords surveyed by Benham and Reeves plan to remain within the sector without making changes to their portfolio over the next 12 months: 4% expect to increase their portfolio and 12% plan to reduce it.
However, as a result of the stamp duty surcharge on buy to let purchases rising from 3% to 5%, some 47% of surveyed landlords said they will not expand it as much as previously planned while 53% will press on undeterred.
Von Grundherr comments: “It’s clear that whispers of a Capital Gains Tax hike in last week’s statement were a considerable concern for around one in five landlords and, had they come to fruition, we could have seen a worsening of the current rental crisis as more landlords chose to call time on their buy to let investment.
“The fact it didn’t materialise has been well received, not just by domestic landlords, but also foreign investors, who are more than happy to pay as it only applies to the net profit they generate. When you also consider that this rate has actually been reduced from the previous rate of 28%, many actually view themselves as better off in the current market.
“However, it’s clear that whilst they didn’t escape completely unscathed, a two percent hike in second home stamp duty costs is a slightly bitter but manageable pill to swallow.”
