New buy-to-let changes may stem the market



It seems that Mr Osborne’s introduction of a three percent surcharge on Stamp Duty Land Tax (SDLT) has gone down like a proverbial ‘lead balloon’ with investors.

In the Autumn Statement, the chancellor announced that people purchasing a buy-to-let or second home will be subject to a three percent surcharge on SDLT, which will come into effect from April 2016.

It’s no surprise that many existing and potential landlords consider this SDLT hike as a serious blow – especially in view of the recent announcement to limit buy-to-let tax relief on mortgage interest.

Mr Osborne said: “People buying a home to let should not be squeezing out families who can’t afford a home to buy.”

Henry Knight commented: “It seems my hope for incentives within housing policies were, as predicted, hopeless and instead another blow to investors has been delivered. An increase to the SDLT will considerably increase the purchase costs for landlords.

“Has Mr Osborne considered the impact this will have on the market? It might open the door for first-time buyers and potentially slow down the increasing buy-to-let market, but by how much? People need to rent and I can foresee a reduction in the number of landlords following next April. It’s also in favour of professional, large-portfolio landlords as opposed to a family owning an investment property to fund retirement. Where some say it will slow pricing – it’s my feeling that buyers will expect sellers to shoulder the increase, and it could cause a pre-increase buying stampede from investors.”

The new rates don’t apply to some types of investment such as caravans, mobile homes and houseboats. Those companies who own more than 15 residential properties may also be exempt subject to consultation – with a view to incentivising large-scale investment in housing.

Like the majority of these new changes, we must wait and see how this is to be administered and more importantly what impact it will have on the buy-to-let market.