Chancellor George Osborne’s pledge to increase stamp duty could dampen the housing market and force up rents, industry experts have warned.
In yesterday’s Autumn Statement, the Chancellor announced a number of new measures to help first-time buyers struggling to get on the housing ladder.
Osborne said that as of 1 April next year, people purchasing buy-to-let properties and second homes will pay an extra 3% in stamp duty.
Jeremy Leaf, former RICS chairman and north London estate agent, said: “Many buy-to-let investors underpin some of the bigger developments in particular. There is a danger that it will kill the market and result in some developments not happening at all.”
Jo Bateson, tax partner at KPMG, said the decision to increase in stamp duty was a further blow to property investors and could reduce demand for buy-to-let.
“These measures might dampen demand for the kind of properties that are marketed as buy-to-let investments. And investors may decide to re-evaluate the attractiveness of the residential market ahead of this announcement coming into effect from next April,” Bateson said.
However, the move by Osborne might actually make things worse for tenants by pushing up rents and reducing property standards.
David Cox, managing director of the Association of Residential Letting Agents, said the increase stamp duty was “catastrophic news” for the private rental sector following the recent changes to mortgage interest tax relief.
“To make owning a buy-to-let property financially viable, landlords will need to pass on the increased stamp-duty costs to tenants, who will in turn see less spent on maintaining their property and of course see increased rents. The changes will also deter new landlords from entering the market, pushing the gap between dwindling supply of available property and growing demand even further apart, which will also – in turn – push up rental costs. The capital, where demand is so strong and last year’s stamp duty changes hurt, rather than helped, will see tenants having the greatest burden to bear.”
