Chancellor George Osborne announced in his Autumn Statement that the Stamp Duty increase will be introduced from April next year following a consultation.
Corporate property development will be unaffected by the changes as well as caravans, mobile homes and houseboats.
The Treasury hopes to raise close to £1bn in savings from the increase in Stamp Duty. Osborne said £60m of these savings would be reinvested in local communities in London and areas like Cornwall where residents are being priced out of home ownership.
Additional housing announcements include the creation of a new London Help to Buy scheme and Help to Buy: Shared Ownership initiative.
The Chancellor confirmed the government would double its housing budget to over £2bn per year to help deliver 400,000 affordable new homes by the end of the decade.
Richard Lambert, CEO at the National Landlords Association, said it was clear that the government wanted to ‘choke off future investment’ in the private rental sector.
“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,” he said.
“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.”
David Cox, managing director, Association of Residential Letting Agent (ARLA), added that landlords would be forced to pass on the cost of increased Stamp Duty to tenants in order to make owning a buy-to-let property financially viable.
“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,” he added.
Andrew Montlake, director at Coreco, said the changes added further concern to landlords who have already been dealt a blow by the Budget announcement that buy-to-let tax relief will be cut to the basic rate of 20%.
“While it is all very well to want to help first time buyers who are struggling to get on the housing ladder by removing a section of the competition, it is important to note that the private rental sector does play an important part in the housing market and the government needs to tread carefully to ensure that a sudden flight of landlords does not cause as many issues as they hope to solve,” Montlake said.
“We continue to campaign for a stable housing market, with increased stock and a sustainable long-term plan to ensure that the owner-occupier, private rental and social housing sectors are vibrant, affordable and offer a real choice to those needing a home.”
