George Osborne has announced that higher rates of Stamp Duty Land Tax (SDLT) will be charged on purchases of additional residential properties, such as buy-to-let properties and second homes, with effect from 1 April 2016.
The higher rates will be three percentage points above the current SDLT rates.
The government said it will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute.
The tax receipts will help towards doubling the affordable housing budget, the government claimed.
David Cox, managing director, Association of Residential Letting Agent (ARLA), said: “The news in today’s Autumn Statement that the Chancellor will increase stamp duty tax on buy-to-let properties by 3% in April 2016 is catastrophic news for the private rental sector, especially following the recent changes to mortgage interest tax relief and the annual wear and tear allowance. Increasing tax for landlords will increase rents and reduce property standards for tenants.
“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.”