Private Landlords to Bear Brunt of Stamp Duty Hike
In his spending review and Autumn Statement issued on Wednesday, George Osborne announced changes to the stamp duty system that look to be bad new for the increasing number of private landlords in the UK.
Buy-let mortgages have seen a surge in popularity of late, with the number of those letting in the private sector having doubled since 2001. There are now some 1.4 million private landlords in the UK, as more and more people try to profit of the constantly growing housing market, particularly in the capital.
Home ownership figures have, as a result, been steadily slipping, as prices for houses have been rising, leaving many stagnating in expensive rented accommodation.
The Bank of England has issued warnings regarding increasing house prices presents in the UK and London in particular after Swiss bank UBS placed London at the top of a list of major world capitals in terms of housing bubble risk.
The Bank has complained that the rising numbers of properties being bought to let is driving prices up across the board and contributing to the house price inflation that is now fast outstripping wage growth. The Bank plans to supplement Osborne 's proposed tax increase with regulatory measures designed to reign in the buy-let market, though exactly what form these measures will take is as of yet uncertain.
In an attempt to quell the dwindling levels of homeownership, Osborne announced a 3% increase to stamp duty payable on buy-let properties that will come into force next April. The hope is that this will slowly but surely disincentivise the swathes of people taking up more and more properties to let out in a market that is currently being taken over by private individuals letting outten or fewer properties.The new charge is intended to raise over £600 million for the government over the next year, and some £880 million in 2020-21.
One commentator, however, predicts an unforeseen short term consequence of a brief drive from landlords attempting to snatch up more properties in the coming months before the changes are fully implemented in April.
The Association of Residential Letting Agents have not welcomed Osborne 's changes, describing the new surcharge as "catastrophic".