Rumours have surfaced this week that the government is considering raising the stamp duty levy even further for buy-to-let landlords.
The threat of a further stamp duty hike aimed at landlords purchasing further properties has hit the headlines this week as a possible measure to control the country’s housing market, which could be included in this year’s Autumn Budget. The rumoured proposal has been met by strong opposition, with some claiming such a move could “break” the private rented sector by driving landlords out of business and leaving tenants with nowhere to live.
The intention behind increasing stamp duty for second homeowners would be to curb house price rises by deterring landlords and opening up the market for more owner-occupiers. Landlords and second homebuyers already pay an additional 3% stamp duty surcharge on additional property purchases, a policy brought in by then-Chancellor George Osborne in 2016, meaning it can now cost much more to buy more than one property.
Could another hike really happen?
The rumour of a further stamp duty increase was actually sparked by an article in The Sun by columnist James Forsyth. He claimed that the Treasury was looking for ways to raise money ahead of the 2018 Autumn Budget, with one option under consideration being a “further increase in the stamp duty rate for buy-to-let properties“.
He wrote: “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.”
Strong opposition to the levy
While the rumour is very vague at this point, with no clear source for Forsyth’s information and the Treasury refusing to comment on Budget speculation, it is already a hugely unpopular idea.
Keystone Property Finance chief executive David Whittaker 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.”
Meanwhile, Liz Syms of Connect for Intermediaries believes that buy-to-let has already “taken a hammering”, although landlords have adapted well to the changes and have remained largely resilient.
“Extra costs are factored in and they understand that, as much as the government wants to cool the market, it is in fact vital for those unable to get onto the property ladder,” she said. “Nonetheless, if the levy is increased it could tip the balance for some landlords who, quite rightly, feel they are being badly harassed by the government.”
We will probably have to wait until the autumn to find out if there is really any truth to Forsyth’s comments, but with the private rented sector making up such a crucial part of today’s housing market, as well as the difficulties already faced by some landlords due to recent changes, it currently seems a highly unlikely route for the government to take.
To work out what stamp duty you need to pay on your property purchase, see our stamp duty calculator.