Last year’s Autumn Statement saw the introduction of a number of new measures, which could have a significant effect on the booming buy-to-let property market.
The Chancellor announced during his speech to the Commons a number of new measures that could affect property investors. Chief among these proposals is the introduction of a three per cent surcharge on stamp duty land tax (SDLT) for buy-to-let properties and second homes that will come into effect from April 2016.
This will see residential property investors charged significantly more when purchasing new homes.
Under the new rules a house bought for £275,000 as a second residence or as a buy-to-let investment would incur SDLT charges of £12,000 on the purchase of the property, which is £8,250 more than would currently be paid.
Alongside this new measure, George Osborne also announced that from April 2019, capital gains tax (CGT) on sold properties will now be due within 30 days of the transaction.
This is a significant departure from the current rules, which requires payment of CGT before the end of the tax year; usually a period of 10 to 22 weeks.
These new proposals follow on from additional changes made earlier in the year during the Summer Budget, which will see mortgage interest tax relief for buy-to-let investors decrease over the next five years.
The deductions from property income for loan interest will be restricted to 75 per cent for 2017/18; 50 per cent for 2018/19; 25 per cent for 2019/20 and 0 per cent for 2020/21 and beyond.
Individuals will be able to claim a basic rate reduction from their income tax liability on the loan interest, calculated at 20 per cent.
“The Chancellor’s political intention is crystal clear; he wants to choke off future investment in private properties to rent.
“The exemption for corporate investment makes this effectively an attack on the small private landlords who responded to the housing crisis by putting their own money into providing homes by the party that they put their faith in at the election.
“If it’s the Chancellor’s intention to completely eradicate buy-to-let in the UK then it’s a mystery to us why he doesn’t just come out and say so.”
Richard Lambert – CEO of the National Landlords Association