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Wednesday, November 25, 2015

Landlords to be surcharged

Buy-to-let landlords are to be surcharged along with people buying second homes following proposals announced by the chancellor in his Autumn Statement.

 From April 2016, landlords will have to pay a 3% surcharge on the stamp duty band for the property.  This is on top of the recently announced increases in tax for higher rate landlords.  I can only hope that my purchase of my barn conversion in Derbyshire will beat the latest changes.

This means that for example properties worth between £125,000 and £250,000 where the stamp duty is 2% will pay 5%.  For the average buy-to-let purchase price of £184,000 this will add an additional transaction cost of £5,520.  Have a look here at the current stamp duty land tax rates

George Osborne anticipates that the change and new stamp duty surcharge on landlords would raise £1bn extra for the cash strapped Treasury by 2012.

Property Hawks view on surcharging on stamp duty surcharge

This is yet another raid by the Treasury on UK landlords.  What is worrying is that the State is placing it's own value judgement on what is deserving housing and what isn't by eroding the level playing field of housing costs established after the eradication of MIRAS in the 1980s.  It is a retrograde step in housing allocation and will only lead to complications and anomalies.  How will it be policed? Wont there be a massive incentive for landlords to 'pretend' to purchase a property as their home only then to subsequently rent it.

The answer as always is not trying to artificially re-allocate housing between tenures through the tax system but to design a system that enable enough new housing to be built to provide for our increasing housing needs.

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