Increased Stamp Duty for Second Properties and Buy to Lets.

So, quite an easy start to this weeks column as the Chancellors ‘Autumn Statement’ has written most of my column for me!  If you haven’t seen the news, for Second Properties, or Buy to Let purchases, stamp duty rates will be 3% higher.  This means that we have the following:

• Value of property £40,000 to £125,000 – additional stamp duty surcharge of 3%
• Up to £250,000 – SDLT increased to 5%
• Up to £925,000 – SDLT increased to 8%
• Up to £1.5m – SDLT increased to 13%
• Over £1.5m – SDLT increased to 15%

Therefore, for a property valued at £175k, stamp duty is currently £1,000 and this will now increase to £6,250.  Quite a hike!  For a property valued at £300k, the additional increase amounts to an eye watering £9k!

The Chancellor says this is in order to help first time buyers.  Some would say that landlords will still buy properties whilst first time buyers struggle to get on to the ladder, but rentals charges may be increased to cover the additional cost.  And whilst this does not come in to force until April 16, some estate agents are predicting a short-term surge in property purchases.

With the recent stamp duty changes and increases in taxation on profits being introduced over the next few years, the Buy to Let sector has taken quite a beating over the last couple of budgets.  Yet with interest rates so low and demand for rented properties increasing, and no clearly defined solution to help first time buyers, I can’t see these changes killing off the buy to let sector just yet!

What it does do is ‘stutter’ interest from those who might have been looking to invest in property compared to plunging savings rates and volatile stocks.  If the Chancellor’s long term vision is to kill offer the buy to let sector entirely, then those who may have been looking at income from Properties as a viable alternative to a pension arrangement may well be slightly more wary given these latest developments.