The budget’s impact on Buy to Let landlords

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 or call 0121 456 5454.

Andy McHugo
Senior Sales and Lettings Manager


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