Chancellor George Osborne has announced that the planned stamp duty hike on purchases of additional property will include those who buy more than 15 properties.
The Budget announcement comes as a blow to institutional investors who would have been exempt from the 3% stamp duty surcharge which takes effect from 1 April 2016.
From 1 April, the extra 3% levy will now be applied to standard stamp duty rates on all purchases of property which is not intended to be the purchaser's main home, even institutional investors backing big developments.
The Treasury says it will raise more than £600m, some of which will go on a new £115m scheme to help the homeless.
David Cox, managing director of the Association of Residential Letting Agents (ARLA), said: “In November, when Mr Osborne announced an increase in stamp duty tax on buy-to-let (BTL) properties, we described this as a catastrophic move.
“Today’s news that larger investors will also have to pay the tax is even worse. Professional landlords – those who typically own more than 15 properties – play a vital role in providing rental stock to the market, and providing the army of renters we have in this country with housing.
“Our members forecast that the supply of BTL properties will dwindle when the new tax comes in to effect, and this news means that supply will fall even faster and harder. We’re already in a position where demand out-strips supply and as supply falls, rent costs rise, meaning the goal of home-ownership falls even further out of reach for most of the country’s renters.”
However the Budget contained some good news for some people who felt they would have been unfairly caught out by the new tax rates.
The grace period during which those who have an overlap between two properties can claim a refund on the higher rates has been extended to 36 months, from an originally proposed 18 months.
That means that people who end up with two homes but are trying to get rid of one will get some breathing room.
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