PropertyMar 1 2016

Buy-to-let stamp duty may increase rents

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Buy-to-let stamp duty may increase rents

Simon Bayley, commercial director of Foundation Home Loans, has argued the 3 per cent stamp duty surcharge will filter down in the form of increased rental charges.

According to Mr Bayley the move to try to put a brake on buy-to-let activity will have an effect that the chancellor probably had not considered.

In the Autumn Statement, chancellor George Osborne announced a 3 per cent premium on stamp duty for buy-to-let investors and those buying second homes, aimed at raising £1bn by 2021.

Mr Osborne explained the new measures were to tackle the issue of second homes bought by those who live overseas and will be introduced from 1 April 2016.

Mr Bayley said: “The extra levy being introduced on stamp duty will in fact just become an unwelcome extra burden for tenants in many cases.

The extra levy being introduced on stamp duty will in fact just become an unwelcome extra burden for tenants in many cases. Simon Bayley

“At a time when more people are finding it difficult to become property owners, there is a sizeable number of people who rely on private rental to have flexibility on location for work opportunities, those with past credit problems or simply because they do not fit the boxes required for social housing.

“It is they who will be paying as the cost will ultimately filter down to tenants.”

Adviser View

Matthew Harris, IFA at Dalbeath Financial Planning Ltd, said: “Only time will tell if this is true because the effects of these kind of tax changes are hard to predict.

“The new stamp duty rules will certainly reduce the number of new buy-to-let properties being purchased over the next few years. For example, we own buy-to-let properties and would have added another one this year but now won’t.

“You might think that a reduction in rental property supply would lead to increased rents but in fact this may not occur.

“The fact that landlords aren’t buying as much means that first-time buyers have a better chance of buying the properties they can afford.

“That means that demand for rental properties should fall, at least relative to what it would have been without the stamp duty change.”