Only Prime Central London Landlords Can Absorb Extra 3% Stamp Duty
Only landlords buying properties in the prime central London market will be able to absorb the extra 3% Stamp Duty charge, which will come into effect on 1st April, according to investment advice firm, London Central Portfolio (LCP).
Investors buying rental properties in other parts of the UK will be hit much harder by the additional tax, claims LCP.
A statement from the firm reads: “For UK investors buying outside prime central London, for affordability reasons and who have benefitted from very low levels of Stamp Duty, the new additional rate sees the tax jump by almost 2.5 times.
“In prime central London, on the other hand, Stamp Duty will rise less than 50% on average. This is likely to be absorbed very quickly, due to the strong, long-term price growth in prime central London of 10.1% per annum, which would equate to 61% over the next five years.”
This fairly modest effect on landlords in London contrasts to the much stronger impact on Manchester, where long-term growth has only averaged 4% per year.
LCP warns: “The additional 3% Stamp Duty will significantly eat into profits. As investors weigh their options, it is areas outside prime central London that are likely to suffer the most.”1
LCP believes the rise in Stamp Duty for landlords is part of a Government attack on the buy-to-let sector, which will institutionalise the market through Build to Rent and institutional investment; large-scale property investors will be unaffected by the extra Stamp Duty, which does not apply to purchasers of 15 properties or more at one time.
Read more on the tax here: /btl-homes-hit-with-increased-stamp-duty/
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