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Landlords have ‘huge opportunity’ to expand portfolios as stamp duty bills halved by chancellor

  • 08/07/2020
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Landlords have ‘huge opportunity’ to expand portfolios as stamp duty bills halved by chancellor
The stamp duty holiday will apply to buy to let and second home purchases, but the three per cent surcharge remains in place, the Treasury has confirmed.


Confusion about exactly which purchases the temporary stamp duty freeze would apply to was ignited among property professionals shortly after chancellor Rishi Sunak closed today’s economic statement.

Under the changes, homebuyers will not pay stamp duty on property purchase prices up to £500,000 until 31 March 2021. But, while stamp duty does not apply on any home purchase up to £500,000, the three per cent surcharge remains in place.

The government’s well-trailed tax cut was welcomed by the mortgage and property industry after it was announced it would be implemented with immediate effect.

The taxation of landlords has been on the government’s agenda since it announced in 2016 that mortgage interest relief would be withdrawn in stages starting in April 2017.

Changes to relief on Capital Gains Tax, and the addition of the three per cent surcharge on every property purchase that was not a main residence followed forcing many landlords to turn their backs on the market.

A tax break that benefits property investors could encourage them back said Charlotte Nixon, mortgage expert at Quilter.

“Buy-to-let investors have left the market in their droves over the last few years after tax changes have made it an untenable investment for many. The stamp duty holiday may serve to entice some of these investors back to market.

“Not only will this cut help to reignite the property market but also improve the supply of rental properties, which has been dwindling over the last 12 months.

“Over the last five to ten years the government have been reforming stamp duty to the remove tax burden from first-time buyers and increase the tax take from landlords, having today waived stamp duty the playing field has been levelled for first time buyers and buy to let investors as both are paying the same nil rate.

“However, these landlords will still need to pay the three per cent second home surcharge.

Analysis of the temporary tax rules by investment broker AJ Bell showed that for a purchase of a home worth £300,000, that is not a main residence which includes second homes and investment purchases, the stamp duty bill would be £9,000 instead of £14,000. This is because the three per cent surcharge on second homes is still applicable. But normal stamp duty rates do not apply.

For a purchase of a £500,000 property, the £30,000 tax bill would be cut in half.

John Goodall, chief executive, Landbay said it was a huge opportunity for landlords looking to expand their portfolios.

“It will give landlords the opportunity to move properties from their own name into limited companies which they may not have done previously due to the stamp duty implications.”

But some experts have argued that it will give buy to let investors an unfair advantage of first time buyers.

Henry Prior, buying agent, tweeted: “First time buyers who had a stamp duty break previously now have to compete with investors and second home buyers.”

In another tweet he said: “Yesterday, if you had bought a £450k ‘additional’ property – as a buy-to-let or 2nd home you would have paid £26k in Stamp Duty. Tomorrow you will pay £13,500.”

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