Buy-to-let investors are facing a future of uncertainty, as the chancellor has announced that stamp duty rates will increase for private landlords, aptly nicknamed “landlord tax”.
On Wednesday 25th November 2015, George Osborne announced that investors buying property for buy-to-let would face an additional three per cent stamp duty tax, creating uncertainty for private investors. Over the last few years, buy-to-let has become a secure investment for those with some money. The low interest rates on savings have made it more likely for an investor to buy a rental property than save for a rainy day. A pension would previously have been rejected in favour of buying property to rent out. According to the Office for National Statistics, almost half of the people surveyed would choose buy-to-let rather than opt for a pension.
The chancellor had already announced the gradual reduction of tax relief on the interest paid on a buy-to-let mortgage, along with a reduction in the allowances claimed for wear and tear. For those landlords who receive very little profit, the reduction of the tax relief has caused a problem, as they may have to opt for selling the property. However, if landlords sell their rental property, they will have to pay Capital Gains within 30 days of the sale.
The additional three per cent stamp duty tax applies to all additional properties, so anyone with a second home in the country will also face a huge extra bill. Mortgage advisers will be aware of this development, thanks to being CeMAP qualified, and will be ready to provide advice to potential landlords.