The budget’s impact on Buy to Let landlords

Reading time: 2 Minutes

Is yesterdays budget by George Osborne a game changer for buy to let landlords?

It has been confirmed in the Autumn statement 2015 by the Chancellor that Stamp duty costs will increase by 3% for buy to let landlords and people buying second homes from April 1st, 2016.

Further to his summer Budget, whereby the chancellor said that landlords would only receive the basic rate of tax relief – 20% – on mortgage payments, a change being phased in from 2017 this is a further statement of intent from the government to potentially curtail the number of new landlords.

So how much will I have to pay?
From April 1st the stamp duty levy will increase as follows

  • Property purchase of £40,000 to £125,000 – Stamp Duty will be levied at 3% (currently 0%)
  • Up to £250,000 – 5% (currently 2%)
  • Up to £925,000 – 8% (currently 5%)
  • Up to £1.5m – 13% (currently 10%)
  • Over £1.5m – 15% (currently 12%).
  • For the average buy-to-let purchase of £184,000, that means they will pay an extra £5,520 from April 2016.

How will this affect the property market?
From the beginning of the next financial year expect fewer investors looking to buy properties. Sounds obvious, but the repercussion’s of this are to the wider property market.
This fast-paced, all action market we have become spoilt by could well be reined, with those vendors waiting for extra pay pot of gold at the end of the rainbow now be left with a tough conundrum of will prices continue to climb or not.
Investment led marketplaces, such as Birmingham city centre for example where as many as 2 in 3 properties are tenanted, will more than likely see a decrease in sales or properties with tenants in situ.
Landlords looking to reduce their portfolios may look to cash in (as the savvy have probably already acted upon) to capitalize in what could be a frantic early January property market……no doubt, come late March, residential property solicitors golf days may go out of the window with a rush of transaction completion.

Does anybody win?
Potentially! For “Commercial investors” (landlords/companies with 15 properties or more, it could well be business as usual, as they are expected to be exempt from the changes. They could effectively have less competition for properties.
It will be interesting to see if it means a more fluid supply of property for residential homeowners, something lacking over the last 12 months.

George Osborne says the new surcharge would raise £1bn extra for the Treasury by 2021.

For what this means to you and your property, including future investments, please contact me in complete confidence as your local property agent, at [email protected] or call 0121 456 5454.

Andy McHugo
Senior Sales and Lettings Manager


Similar Posts

The people we've helped
  • 5 star review  This is our second experience with James Laurence, this time as Sellers but 2.5 years ago as buyers. I wrote a review about the previous experience which was excellent and I believe this experience warrants another great review. This time we worked more directly with Henry who is an excellent communicator. From the word go he demonstrated impressive subject matter expertise, confidence and professionalism. He regularly follows up on progress and bridges the gap between purchaser and vendor extremely well. I'm confident that James Laurence is a company that has high standards embedded in to its culture and highly recommend them.

    thumb David Smither
  • 5 star review  Had a great experience with James Laurence. Reece Parkinson and Henry Crane were excellent. As a first time buyer, they were very patient with me and my questions and reassured me at every hurdle. Henry even helped chase my non-responsive solicitors which I’m forever grateful for. I would highly recommend

    thumb Dariusz Paszkowski
  • 5 star review  Honestly can't thank Kelly enough for all the help she has given me during my current moving process! As stressful as it has been, Kelly has gone above and beyond to clarify and assist me on information, even during her own time when not at work. Kelly is a real asset to this branch and gives the company a good reputation, would definitely recommend her and this branch to others, and would use them again for future moves. Thanks again so much! :)

    thumb Callum Phillips
  • 5 star review  We recently chose James Lawrence to sell our flat in the Jewellery Quarter, and couldn't be happier that we did. Henry and Reece were both exceptional, and kept us informed throughout the entire process, as well as chasing up all parties at key moments to make sure things kept moving. Everyone we dealt with was friendly and approachable and we highly recommend choosing James Lawrence if you're looking to sell your property.

    thumb Shane Bickerton
  • 5 star review  Recently completed on a flat sale with James Lawrence and it was the straightforward process one could normally only hope for. Nice to have estate agents (Henry & team) who were ahead of you at every moment in terms of updates on the sale. If you like to be well informed, advised and are generally a-bit too busy with life to let the buying/ selling of your property become a typical housing headache then I’d only recommend them to alleviate the strain!! Cheers guys for the help - professional, amiable and tight ship.

    thumb Jason Ho