George Osborne's Latest Statement Hits Landlords Where It Hurts

George Osborne's Latest Statement Hits Landlords Where It Hurts

First there was the announcement that the mortgage interest allowance for landlords would be reduced to the minimum 20%, then the scrapping of the Wear and Tear Allowance, and now with Mr Osborne's latest Spending Review we are told that the picture could become even bleaker for buy to let landlords.

In yesterday's Statement, the news came that from April 2016 landlords would have to pay an additional 3% in Stamp Duty Land Tax on top of the current level when they purchase a buy to let property. This means previously tax free purchases up to £125k will now pay 3% stamp duty. Although landlords in London and the South West will be most affected given the high property prices there, landlords further north will still feel the pain as can be seen below.

On our patch in Wakefield, most landlords will pay under £125k for an investment property, the current threshold for paying any SDLT, and so currently have nothing to pay. The new rules will mean a property costing between £40,000 and £125,000 will require a payment of 3% SDLT. So, for a property with a purchase price of £100,000 that's an extra cost of £1,800.

What effect this will have on the buy to let property market remains to be seen. Some landlords will choose to sell some of their stock to avoid the risk of not being able to sell it for a good price to investors later on. Others will want to buy up as much stock as they can before the new rules come in. Yet others will look into setting up a company to purchase their properties through as it could be a way for them to be exempt from paying any SDLT.

Watch this space.

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Published on 26 November 2015

Source Trinity Sales Wakefield

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