The Autumn Statement and Spending Review saw Chancellor Osborne pile more financial misery on buy-to-let landlords. Mr Osborne announced that the government is to raise stamp duty on buy-to-let properties and second homes by 3%.
These alterations are planned to come into force in April 2016.
Reaction
Understandably, there has been a heated reaction to the news across the industry.
Richard Lambert, CEO of the National Landlords Association, believes, ‘the Chancellor’s political intention is crystal clear, he wants to choke off future investment in private properties to rent.’ [1]
‘If it’s the Chancellor’s intention to completely eradicate buy-to-let in the UK then it’s a mystery to us why he doesn’t just come out and say so,’ he added.[1]
Paul Smee, Director General at CML said, ‘additional stamp duty on buy-to-let transactions come hot on the heels of the forthcoming tax changes to landlords already announced. The Government will need to keep a careful eye on the cumulative effects; with the private rented sector housing around a fifth of the population, we do need to avoid unintended consequences.’[1]
Catastrophic
David Cox, managing director of the Association of Residential Letting Agents (ARLA) described the increases as, ‘catastrophic news for the private rental sector ,’ considering the, ‘recent changes to mortgage interest tax relief and the annual wear and tear allowance.’ He feels that, ‘increasing tax for landlords will increase rents and reduce property standards for tenants.’[1]
Cox fears that, ‘to make owning a BTL property financially viable, landlords will need to pass on the increased stamp-duty costs to tenants, who will in turn see less spent on maintaining their property and of course see increased rents.’[1]
Autumn Statement: The industry reacts
He also believes that the changes, will, ‘deter new landlords from entering the market, pushing the gap between dwindling supply of available property and growing demand even further apart.’[1]
Stuart Law, CEO at Assetz for Investors, said, ‘the buy-to let investor should not be blamed for house price rises, rather this is down to the chronic shortage of housebuilding in this country which is compounded by population growth. We would therefore advise caution against penalising this group of investors when actually other policy areas hold the key to unlock the solution.’[1]
Blow
Alex Gosling, CEO of online estate agents HouseSimple.com simply said, ‘ouch.’ He did go on to say that the changes in stamp duty were, ‘another blow to landlords, so soon after the cut in mortgage interest tax relief.’ He also described George Osborne as, ‘enemy No1 for the buy-to-let sector.’[1]
‘Hopefully, this hasn’t sounded the death knell for buy-to-let,’ he added.[1]
Jonathan Hopper, managing director of buying agents Garrington Property Finders noted that, ‘landlords are under attack again,’ calling the move, ‘Osborne’s buy-to-let double whammy.’ He believes buy-to-let landlords are, ‘going to get sledge-hammered with a bigger stamp duty tax bill.’[1]
He went on to ask, ‘why does Osborne have such a grudge against the buy-to-let sector?’[1]
A question that will continue to provoke debate, methinks.
[1] http://www.propertyreporter.co.uk/hero/btl-and-second-homes-to-be-hit-by-3-rise-in-stamp-duty.html
