Chancellor George Osborne has announced a raft of changes to the property sector in his Autumn Statement, including a three per cent increase in stamp duty for buy-to-let landlords and an extension of the Help to Buy scheme.
Buy-to-let landlords will have to pay more in stamp duty from April 2016, Chancellor George Osborne has revealed.
In yesterday’s Spending Review and Autumn Statement, it was announced that those who buy a second home will also be hit with the extra 3% on each stamp duty band.
This means that for properties worth between £125,000 and £250,000, where stamp duty currently rests at two per cent, buy-to-let investors and second home owners will pay five per cent from April next year.
It is hoped that this plan will raise £1billion extra for the Treasury by 2021 and ease the pressure for first-time buyers within the market by funding additional house-building across the UK.
Lucian Cook, Savills UK Head of Residential Research, said of the change: “The likelihood is that this will further suppress transactions and prices in the prime central London market, given the extent to which this market has been supported by purchases from second home owners and investor buyers, meaning the ability for this additional levy to generate greater revenue from these buyer groups is less assured.”
Nick Barnes, Head of Research at Chestertons, added: “Increasing stamp duty on all buy-to-let properties by three per cent is likely to turn many new and existing landlords away from the sector and reduce the number of homes to rent and almost certainly drive up rents for the millions.”
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 within 30 days of selling a property, instead of waiting until the end of the tax year.
In further changes announced, the Help to Buy scheme has been extended to 2021 – a year longer than originally planned – with an extension to the scheme in London, which will see buyers with a five per cent deposit given a loan worth up to 40 per cent of the property. The loan will be interest-free for five years.
Elsewhere in the country, the existing maximum loan is capped at 20 per cent of the property’s value.
Mr Osborne said that the government would pump an extra £6.9billion into housing, proclaiming in his opening salvo that “We are the builders”, and announced the construction of 400,000 new homes by 2020. He went on to set out his stall for what might turn out to be the “largest home building initiative since the 1970s”, a claim dismissed by Labour as more rhetoric. They said: “If hot air built homes, then Conservative ministers would have our housing crisis sorted.”
The allocated budget of almost £7billion for housing includes an extra £2.3billion in loans for the Starter Homes programme – a scheme which offers first-time buyers a 20 per cent discount. A total of £4billion will be lent to housing associations and local authorities to build more homes for shared ownership.
There will also be a pilot scheme to trial the government’s Right to Buy programme for housing association tenants.
An extra £200million will be used to build homes for rent, with the intention of allowing tenants to save for a deposit. And some inner city prisons such as Holloway Prison will be sold off for housing.
Keith Bowman, Analyst at Hargreaves Lansdown, said: “Osborne has given with one hand and taken away with the other.
“He doubled the housing budget, which is good news and a reason for housebuilders being strong in the first place, but at the same time he has added a new rate of stamp duty for buy-to-let investors.”
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