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TODAY'S OTHER NEWS

Buy-to-let landlords welcome stamp duty cut

Yesterday’s summer statement provided a much welcome boost for buy-to-let landlords who stand to benefit from the stamp duty holiday. 

The levy has been scrapped immediately for all homes under £500,000, to kickstart the stalled housing market and galvanize the flagging economy. 

Rishi Sunak said the move would benefit nine in ten homebuyers, saving £4,500 on the average purchase.

But with the threshold raised, purchasers, including buy-to-let landlords, acquiring a property for less than £500,000 will save up to £15,000 on their total tax bill.

However, the 3% surcharge for additional homes, including buy-to-let properties, still applies on top of the revised standard rates, so purchases of homes valued up to £500,000 will attract a 3% stamp duty bill.

Sara Macallum, senior partner at Boodle Hatfield, said: “The 3% surcharge will still sit on top of these new bands – so for buyers of second homes, they will pay 3% SDLT up to £500,000, as opposed to 3% up to £125k, 5% from £125k up to £250k, and 8% from £250k to £500k.”

“Overall, it works out as an SDLT saving of £15k for both normal and additional rate taxpayers. Taking the example of a first-time buyer of an apartment for £750k, they will pay SDLT of £12,500 instead of £27,500. If on the other hand this were someone buying a second home, they would pay SDLT of £35,000 instead of £50,000. 

“Companies will also benefit from these changes where they are not subject to the flat 15% rate.”

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    Sounds good for property buyers - but maybe it's not as good as it looks, because:
    - Property sellers may well raise their prices, wanting a share of the buyer's savings
    - Property prices will inevitably rise, as demand increases as result of this measure. So the buyer does not gain as much as he/she hoped.
    And of course it does nothing to help those who simply cannot get to the first rung of the housing ladder. Who just have to carry on renting. And there will be lots more of these, as so many jobs have now been lost.

    Matthew Payne

    Completely agree. Prices always spike when we get stamp duty holidays or potential increases as we had when the 3% second home was introduced in 2016. These increases will far outweigh any savings especially as this one is focussed at the bottom end of the market, as not only will agents and vendors start putting their prices up, but buyers will be competing often in a sealed bid scenario. Some may still not care though, as an extra £20,000 paid for a property is mortgageable and the £10,000 stamp duty saving is cash. Lenders may take a different view though and this may actually prolong any high LTV rates being reintroduced.

     
  • icon

    Remember the £2000 car scrappage scheme? New car prices rose, often by over £2000. Market forces always win over government interference or assistance.

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