The Labour Government has ramped up its increasingly anti-landlord policies by increasing the stamp duty they pay when buying rental properties from 3% to 5%.

This means someone in England or Northern Ireland buying a £300,000 buy-to-let property will see their stamp duty rise by £1,250 from £11,500 to £12,750. This is significantly more than ‘first home’ buyers pay, whose bill for the same property would be just £2,500

Explaining the increase within briefing notes accompanying her Autumn Budget, Chancellor Rachel Reeves said: “Increasing the higher rates of SDLT on purchases of residential property is expected to disincentivise the acquisition of second homes and buy-to-let properties, freeing up housing stock for main home and first-time buyers”.

This is the first time that Labour has openly said it wants fewer landlords in the market and more first time buyers, a point that the NRLA has warned will see fewer properties in the rental market which in turn will push up rents.

First time buyers

And as estate agency Hamptons recently revealed in comments to LandlordZONE, many landlord properties that are sold are bought by first time buyers, so the benefit claimed by Reeves is diluted somewhat.

“Buy to Let landlords are already struggling – a two-thirds increase in stamp duty will hit them very hard,” says Phil Blackburn, Partner at business advisors and chartered accountants Lubbock Fine.

“We’ve already seen a marked decrease in the purchases of rental properties – those purchases have fallen to their lowest levels since stamp duty on additional dwellings was introduced in 2016.”

Ben Beadle (ictured), Chief Executive of the National Residential Landlords Association, says: “Hiking stamp duty on homes to rent when 21 people are chasing every rental property makes no sense. “Analysis by Capital Economics has found that increasing Stamp Duty on rental properties from three to five per cent will see a net loss of half a million homes to rent over 10 years. This will not help the huge number of tenants for whom homeownership is still a distant dream.  

“The Chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up.

“What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents.”  

Kevin Shaw, MD of Leaders Romans Group, says: “The changes in stamp duty (STD) for second homes from three to five percent may impact some purchases, although the majority of investors take a long-term view.

“It will, however, support people buying first homes, especially first-time buyers. Overall, they stuck to their manifesto. The bigger picture is that inflation is falling, and so too are interest rates; we have stable house prices, and incomes in the main have increased, which is all having a positive impact on affordability.”