In Depth

Stamp duty: how the new rules affect buy-to-let landlords

Buy-to-let property will attract a 3% stamp duty surcharge from April next year – and other taxes will rise too

George Osborne has announced a new 3% stamp duty surcharge for buy-to-let properties from 1 April 2016, a move that will almost treble the tax bill for buying a £275,000 home, raising it from £3,750 to £10,800.

Announcing the move during his autumn spending review, the chancellor said: "Frankly, people buying a home to let should not be squeezing out families who can't afford a home to buy."

The policy has been greeted with fury by landlords and other industry figures, who were already reeling from other recent measures, including tweaks to mortgage interest tax relief.

Richard Lambert, chief executive of the National Landlords Association, waded in with strong words, saying: "The chancellor's political intention is crystal clear; he wants to choke off future investment in private properties to rent."

He added: "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".

Stuart Gregory, a mortgage expert, expressed himself even more forcefully, writing on Twitter: "Osborne just killed buy-to-let." While Jamie Morrison of HW Fisher & Company added: "It's starting to feel more like an all-out offensive" on residential landlords."

Robert Pullen, the tax manager at Blick Rothenberg LLP, looked into the future, noting: "This is likely to cause initial spike in house prices as investors rush to buy, but the long term impacts are not known. It could result in even larger rent costs as landlords seek to recover the new tax."

While Pullen was looking ahead, David Cox, managing director of the Association of Residential Letting Agents, looked into the past, describing the news as "catastrophic… especially following the recent changes to mortgage interest tax relief and the annual wear and tear allowance".

So is there any hope for landlords? Simon Lambert of the Daily Mail says there is. He writes: "Property investors still have a trick left up their sleeves. When it comes to selling up, they can offset purchase costs against any eventual capital gains tax – and that includes stamp duty.

"So, while they will get whacked with a big bill now, if a buy-to-letter eventually sells at a tasty profit, they can claim stamp duty back later on CGT."

Stamp duty pledge: Labour and Tories go back to basics 

27 April

Ed Miliband will go to Stockton-on-Tees today - the scene of Margaret Thatcher’s “walk in the wilderness” in the 1987 general election campaign - to announce that Labour will scrap stamp duty on homes worth up to £300,000 for first-time buyers.

As both Labour and the Tories try to break the deadlock with ten days to go, Miliband’s offer – along with the rent controls announced over the weekend – is designed to refocus the Labour campaign on the “cost of living crisis”.

On top of the stamp duty pledge, Miliband will say Labour would order developers to set aside half their new homes for people who have lived in an area for three years. 

Local authorities would also be given the power to stop developers creating derelict “land banks” by charging council tax on proposed homes where land has been banked for five years without building taking place.

The Conservatives have called the stamp duty offer a "panicky, unfunded announcement”.

But Fraser Nelson, editor of the Tory-supporting Spectator, says Miliband is right: “This failure of stamp duty thresholds to rise with the market has been a way for Chancellors to cash in on the asset bubble.

"Stamp duty cost homebuyers £9.5bn last year – Osborne plans to jack this up to £18bn by 2019/20... That’s not right: buying your first home is hard enough, without the government whacking up the price even further.”

David Cameron meanwhile is refocusing the Tory campaign on the party's economic record with a warning to voters: "Don’t let Labour wreck it”.  

It is backed up by a letter in the Daily Telegraph signed by leaders of 5,000 small companies warning that Miliband’s policies would wreck economic recovery.  

The letter was organised with the help of Cameron’s business guru, Karren Brady of the TV show The Apprentice, who says they signed it because of “horror at the alternative”. 

However, there are growing signs of panic in the Tory camp that the use of the economy to frighten voters off Labour is not working. 

Lord Heseltine adopted the Corporal Jones role, telling the Financial Times the party should not panic but “hold its nerve”.

But latest growth figures due to be published tomorrow are expected to deliver a blow to the Tory claims about economic competence. They are expected to show that Britain’s economy is continuing to grow, but that the pace has slowed from 0.6 per cent to 0.5 per cent in the first three months of this year.

It follows a weekend of jitters in the Tory campaign, with two party donors saying Cameron should stand down immediately if he loses on 7 May and let Boris Johnson, the London mayor, lead the party.

After his verbal punch-up with Ed Miliband on the sofa of the Andrew Marr Show - which many believe went to Miliband on points - Boris has come back with an upper cut in his Monday column in the Daily Telegraph

The Mayor of London writes that even the communists in Vietnam admitted rent controls proved more destructive in Hanoi than US bombing.

“If Miliband won’t listen to me, he should pay attention to his ideological kinsmen in formerly commie Vietnam. This isn’t a new policy. Lefties have been there, done it, and they know it is a disaster.”

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