Buy-to-let landlords and people buying second homes will soon have to pay more in stamp duty, the chancellor has announced.

From April 2016, those in England and Wales will have to pay a 3% surcharge on each stamp duty band.

George Osborne said the new surcharge would raise £1bn extra for the Treasury by 2021.

Landlords reacted angrily to the change, saying it would “choke off” investment in rented properties.

Other changes announced by the chancellor included an extended Help to Buy scheme in London, and more money for the Starter Homes programme.

‘Choke off investment’

The stamp duty surcharge will lift each band by 3%. That means that for properties worth between £125,000 and £250,000, where the stamp duty is 2%, buy-to-let landlords will pay 5%.

For the average buy-to-let purchase of £184,000, that means they will pay an extra £5,520 from April 2016.

Commercial property investors, with more than 15 properties, are expected to be exempt from the new charges.

Stamp Duty Rates (on purchases)
Property value Standard rate Buy-to-let/second home rate (April 2016)
Up to £125,000 0% 3%
£125 – £250,000 2% 5%
£250 – £925,000 5% 8%
£925 – £1.5m 10% 13%
over £1.5m 12% 15%
Source: HMRC

Buy-to-let landlords will also be hit by a change to Capital Gains Tax (CGT) rules.

From 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, as at present.

Landlords are already due to get a lower rate of tax relief on mortgage payments.

In his summer Budget, the chancellor said that landlords would only receive the basic rate of tax relief – 20% – on mortgage payments, a change being phased in from 2017.

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.

www.bbc.co.uk/news/business-34922738

 

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