Buy-To-Let suffers in 2015 Spending Review
PUBLISHED: 06:00 26 November 2015
Chancellor George Osborne announces higher stamp duty for Buy-To-Lets in yesterday's review
From April 2016, England and Wales will have to pay a 3 percent surcharge on each stamp duty band, which landlords have overtly spoken out against in the hours since the announcement, saying it will “choke off” investment in rented properties.
Properties worth between £125,000 and £250,000, where the stamp duty is 2 percent, will increase to 5 percent for BTL landlords. For the average BTL purchase of £184,000, that means they’ll pay an extra £5,520 from next Spring. Meanwhile, commercial property investors will be exempt from the new charges if they own 15 or more properties.
Commenting on the Spending Review and Autumn Statement 2015, Chris Endsor, Chief Executive of Miller Homes, says: “We are pleased that housing remains a key priority for the Chancellor and we welcome the measures announced today which continue to support the aspirations of those seeking to achieve home ownership.
“Creating additional means by which people can realise these dreams, such as the Starter Homes initiative and Help to Buy Shared Ownership scheme, is important, however having a robust planning system which supports the supply side efficiently to meet this demand is critical. We therefore applaud the announcement today that there will be further reforms to the planning system and increased availability of more land for housing.”
Buy-To-Let landlords will also see a change to Capital Gains Tax (CGT) rules. Although not being implemented until April 2019, they will have to pay any CGT due within 30 days of selling a property, rather than waiting till the end of the tax year (which is currently how it works).
Landlords are already due to get a lower rate of tax relief on mortgage payments.
Responding to the latest changes, Richard Lambert, chief executive of the National Landlords Association said: “The chancellor’s political intention is crystal clear; he wants to choke off future investment in private properties to rent.
“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”.
Up to £60m of the money raised from the stamp duty surcharge will go to help home-buyers in England in places where holiday homes have forced up local prices.
The Help to Buy (equity loan) scheme in England will also be extended to 2021, one year longer than planned. Outside of London, the existing maximum loan for this scheme is for 20 percent of the property’s value.
The government’s total investment in housing will be an additional £6.9bn.