Following on from a recent article highlighting the interest rate implications for buy-to-let property owners, it would seem that the government are considering a stamp duty surcharge on additional homes, holiday homes and buy-to-let property.
Ex chancellor, George Osbourne, introduced a three per cent surcharge in April 2016 for additional property. It has now been widely speculated that a new surcharge is set to be introduced this autumn.
James Forsyth, political editor of the magazine Spectator has said: “The Treasury is looking for ways to raise money ahead of the Budget this autumn.
“I understand one option being considered is a further increase in the stamp duty rate for buy to let properties.
“This would, so the thinking goes, raise money for the Exchequer and help keep house prices down.
“But if the Government is serious about helping more people on to the property ladder, as opposed to just raising yet more money from Stamp Duty, then what’s needed is changes to the planning laws to get far more homes built where people want to live.”
Recent surveys carried out by propertypriceadvice.co.uk stated that: “12% of buy-to-let landlords admitted that they were already struggling,” because of recent tax changes and the mounting pressure of increased mortgage repayments. They feared that any additional financial increases would force them to sell their homes and leave the buy-to-let sector.
This could become a very legitimate concern for the rental market. If less homes are available for renters, the result could be inflated rents, and more worryingly, the threat of homelessness if supply cannot meet demand.
David Whittaker, chief executive of Keystone Property Finance has said: “A further hike in stamp duty aimed at the sector really would be the straw that broke the camel’s back and could result in landlords exiting the market in their droves. This would be disastrous for the country. It might peg house prices back a bit, but it would hurt those in the rented sector more and could lead to an increase in homelessness.”
One Conservative member opposed to the plans, Lord Lilley, the former social security secretary, has claimed: “The only two ways to get house prices down are to build more houses or to prevent people buying them, by putting taxes on them. They’ve opted for the second one. But we just need to build more houses. We’ve let four million extra people into the country and we haven’t built enough houses for the people who are already here.”
Placing additional pressure on the buy-to-let sector could have extremely detrimental and dangerous implications for those within the sector. Renters may struggle to find housing in the places they want to live, landlords may be forced to sell their buy-to-let properties and both will suffer from increased rent of taxes. Meanwhile, the country will still suffer from a severe lack of housing.
Although the government have an obligation to ensure appropriate taxes are paid, they should maintain a fair system ensuring they will not cause an imbalance that would negatively impact on an already vulnerable sector.
Are you aware of the struggling buy-to-let market? Do you think that renters will become victims of further taxation? What would you propose?
2 Responses
Bring it on. Tax them even more. These people, some of who own hundreds of properties are a significant contributing factor to why first time buyers can’t buy homes. House prices, particularly in the first time buyer price range are being artificially inflated by the competition amongst buy to let landlords to snap up these (to them) cheap and affordable houses, who then want to let them out to first time buyers, who can’t compete. The irony of it all.
I think rent will go up