Landlords and buy-to-let investors will now have to pay an additional 3% stamp duty on all their property purchases following the announcement of the increase by Chancellor George Osborne.
Following today’s announcement, the changes, which will not be implemented until April 2016, will see the threshold for stamp duty on buy-to-let purchases now begin at £40,000 with purchases up to £125,000 incurring 3% stamp duty.
Properties up to £250,000 will incur the initial 3% for the first £125,000 of the investment, with a 5% charge on the second £125,000. An 8% duty will be added to the next £250,000 needed to purchase a property up to the value of £500,000.
Any buy-to-let properties worth up to £250,000 will have a stamp duty of 5%, with 8% charge for those valued up to £500,000.
The move comes as a part of the Chancellor’s wider goal of funding the Government’s housing budget, with Mr Osborne planning to raise £1bn by 2021. The money has been pledged to help double the housing budget to £2bn, which will see the Government back the construction of 400,000 new affordable homes across the UK.
Elsewhere in the housing market, the Government will be trialling their new ‘Right to Buy’ scheme across five housing associations from midnight tonight. The move will see tenants able to purchase their own homes.
Additionally, Mr Osborne has also expanded the ‘Help to Buy’ scheme. The rules surrounding the shared ownership section of the scheme have been relaxed to allow more people to benefit. The Chancellor also announced that the scheme would be expanding into London.
With London’s housing market being described as ‘unsustainable’ by Nationwide chief Graham Beale yesterday, the move will move to address the difficulty many in the capital have getting onto the housing ladder amidst spiralling house prices.
Londoners who able to provide a 5% deposit on a property will be able to apply for a 40% interest-free loan on the value of a new build property.
With changes to the buy-to-let system, it is expected that there will be a shift in the UK’s housing market, with more investors looking to the north in order to limit the new stamp duty costs that the property market in the south is likely to incur.