George Osborne has announced significantly increased rates of stamp duty land tax for people buying second homes and buy to let property.
In his Autumn Statement on 25th November the Chancellor announced that from April 2016 people buying an additional home will have to pay an additional 3% stamp duty surcharge when they complete the purchase. The additional 3% applies across all the current rates. So for instance someone buying a house for £250,000 currently pays £2,500 tax (1%). From April, if they are buying the property as a second home, or to let, they will pay £10,000 tax (4%).
The Chancellor is also restricting income tax relief on rent income from April 2017.
The Government argues that as more homes are bought to be let out as investments, so young people and families seeking to buy their first home are being squeezed out of the market.
Commentators and property experts are warning that the new measures will stifle property investment and lead to shortages in the rental market.
The move represents a shift in policy away from supporting prospective landlords to buy houses to let out to families who cannot afford to buy, towards relieving the pressure on the market which is currently forcing up prices. Last month statistics emerged that show home ownership in UK has declined to a level lower than that in France for the first time.
It is arguable that this is treating the symptoms rather than providing a cure. The fundamental problems are the shortage of affordable homes, which limits the market, and restrictive lending rules that prohibit many people from getting the mortgage they need. Help to Buy and similar schemes have had limited success in providing an affordable route for your people to get on the housing ladder, and arguably have simply pushed prices to even less affordable levels. Until the supply of affordable homes is re-stocked it is questionable whether penalising landlords will actually be the answer to the current needs.
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