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Govt to impose higher stamp duty on buy-to-let

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Chancellor George Osborne has announced a raft of measures to help people onto the housing ladder, including increased stamp duty rates for buy-to-let properties.

Giving his Autumn Statement today, the Chancellor said he will introduce a new rate of stamp duty which is 3 per cent higher than a residential property of the same price and will be introduced in April next year.

Money raised from tax on people buying their second home will be used to help those struggling to buy their first home.

He said: “Frankly, people buying a home to let should not be squeezing out families who cannot afford a home to buy.”

Osborne also announced a new Help to Buy scheme for Londoners which providers those with a 5 per cent deposit an interest-free loan of up to 40 per cent of the value of a newly-built home.

He also announced a Help to Buy: Shared Ownership to help people get on the housing ladder. It will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership.

Only military personnel will be given be priority over other groups. The scheme will apply across England.

The Chancellor also pledged to double the Housing Office’s budget to £2bn a year and to introduce further planning reforms.

Osborne has previously announced plans to build 200,000 starter homes for first-time buyers at a 20 per cent discount.

The Chancellor has previously announced plans to extend the Right to Buy scheme to housing association tenants. He confirmed today that from midnight five housing associations would start this process.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. This is good news from several perspectives.
    1. It will make BTL less attractive. We now have several measures in place. No tax relief on interest, abolition of the straight 10% relief and now this. This should all go to cooling the affordable housing shortage. There is of course a loophole. Buy the property as a PPR and then move (after paying off the mortgage) renting out the old PPR. Then you are only hit with the 10% withdrawal, but can still claim of maintenance and improvements as they arise.
    2. If this does indeed make BTL less attractive then it may well serve as a boost to equity investments, which in my view have great advantages over property investment.

  2. All this will do is stagnate the market. The reason properties are sold on a BTL basis is because they are generaly less desirable and therefore being sold off on the cheap. BTL investors do not pay premium prices. They are motivated by yield only.

    The reason most people struggle to buy is because of the limitations put in place by lenders because of MMR and the reluctance most lenders now have to lend to families. This is what has forced them to rent or take out massively overpriced secured loans to extend their current properties.

    Every time Osborne does this to the BTL market, all he does is increase the cost of renting which means that these victims of the ill conceived regulation have even less disposable capital to save.

    Great sound bite though George.

  3. A London focused solution to a London focussed issue from London focussed politicians. As a Scottish person with no housing issues, why should I be happy to contribute to this guff at all? The problems are of their own making so let them pay for their own solutions. They will enjoy ridiculous equity growth after all and Londoners should not be allowed to drain the rest of the UK for their madness.

  4. He said: ‘Frankly, people buying a home to let should not be squeezing out families who can’t afford to buy a home.’

    There’s no reason they should. If you have one home and two potential buyers with the funds to buy, the solution is to let a second home to be built.

    There’s no reason why this doesn’t happen – other than the machinations of the Town & Country Planning Act. He’d have been better off ripping that apart: more homes for people to live in, whether FTBs or heaven forbid investors prepared to let homes. People can’t live in fields.
    But he hasn’t liberalised planning it seems. So anyone with a background in economics will understand what he has done in the context of inelastic supply. He’s put a tax on private investors (and effectively existing homeowners) to give a nice subsidy to large housebuilders sitting on their own landbanks.

    Mind you, I’m immensely amused they’re taking the definition of “affordable housing” from the Left. It used to mean “stuff Labour’s target/client voters can have”. Now it means “stuff target Tory voters can buy in the belief they’re getting a subsidy” – though the fixed supply means the subsidy goes to the builder/landbanker.

  5. Hi Steven

    Not sure where you live but I have to disagree with your comment about BTL properties being ‘less desirable and sold on the cheap’. I live in a middle-class area of Liverpool (yes, it has them!) of solid 30’s semis priced between £200-£250k. Boards that went up used to be 95% For Sale with hardly a house to rent – now it is about 60/40.
    Whilst there have been issues with mortgage availability since MMR, the main problem is that homeowners are not competing on a level playing field with BTL investors: –
    1. They cannot write off the mortgage interest against income like BTL investors can.
    2. They haven’t been able to write off maintenance costs against income like BTL investors can.
    Higher LTV loans are starting to come back at competitive rates as lenders complete the replacement of reserves and are stronger, so all these measures together might start tipping the scales back in favour of people buying to live in houses rather than being forced to rent off someone else who is being given tax breaks for the privilege!

  6. Duncan Lancashire 26th November 2015 at 10:59 am

    Could couples who want a single BTL investment be able to avoid the new stamp duty by arranging ownership so that they each own a single property?

  7. Hi Kevin, my points were not specific, but generalised. I have never known a buy to let client enter into a bidding war.

    BTL investors also have residential mortgages so I fail to grasp your statements about level playing fields when they are not the sake thing. It’s a business decision not a personal one. I am not sure if you noticed buy this article is about stamp duty and not the tax changes which you have commented on.

    I wonder who will get blamed when houses go unsold and new builds stall once again because the added disincentive.

  8. Fail to see that stopping people buying more than one house is going to mean more people buying.

    Firstly, people still need a big deposit. Doubt that people will suddenly have that big wedge of cash.

    Not convinced this will depress prices enough to reduce the deposit by much.

    Secondl

  9. Secondly, there is no reason for house numbers to be fixed.

    This is a supply and demand problem.

  10. I would go further and take away all tax relief on mortgages in connection with BTL and make it the same as residential.

    I would also bring in rent controls as in other European countries to control rip off land lords and agents.

    The property market in the UK is madness and I feel very sorry for young people trying to get on the housing ladder.

    These action by a CONSERVATIVE government are very welcome but I think that George will need to go further.

    Labour let this situation with property develop and did nothing maybe it was because too many MPs were too busy flip houses

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