Chancellor announces plans to increase stamp duty for BTL – how will this impact market?

In last month’s Autumn Statement, the Chancellor announced plans to introduce an increased rate of Stamp Duty for property investors purchasing buy-to-let properties. From April 2016, investors will pay an additional rate of 3% (on top of the basic SDLT rate) on additional properties, generating £880m for the Treasury in 2020-21. 

The new rates are likely to add between £3,500 - £7,500 to the cost of a £250,000 property and some have raised concerns that the changes will negatively impact the UK’s buy-to-let market and may even discourage potential investors.

Buy-to-let investors occupy a vital role within the UK’s property market, providing young professionals with a range of accommodation options in a market where home-ownership may not be possible for all. 

Stephen Ludlow, Chairman of ludlowthompson, adds: “BTL investment has been vital in dramatically improving the quality of housing stock over the last 25 years. These changes are a surprise from a Government which pledged to keep intervention in the housing market to a minimum.

“The Government run the risk of hitting the supply of rental accommodation across the UK, which in turn will have an impact on the labour mobility of young professionals.

"These increases to stamp duty rates create a barrier to entering the buy-to-let market, so there may be fewer investors coming into the market. Those investors that do continue to invest will find a market with continued high demand but a lower supply, meaning that rental rates are likely to rise."

In addition, ludlowthompson data reveals that since 2000, total investor returns have averaged around 10%, which furthers highlights the health of the market.