The Institute for Fiscal Studies (IFS) has slammed the Stamp Duty rise for landlords, warning that tenants will suffer as a result of the Budget announcement.

The independent research body's direcgtor Paul Johnson (main image) labels Chancellor Rachel Reeves’s decision to increase the higher rate for additional properties from 3% to 5% as “deeply disappointing”.

“I have said again and again that stamp duty land tax is among the most economically damaging of all our taxes, and yet we have it increasing again,” says Johnson. “The increase may just be on second properties, but it is renters who will pay part of the cost as the supply of such properties falls.”

Dissent

He joins many other industry bodies voicing dissent over the Stamp Duty changes, including Propertymark which has previously called for the SDLT surcharge on second homes and BTL homes to be revised as it deters likely rental property investors.

In a further blow, Reeves failed to extend the temporary Stamp Duty threshold reductions which reset from 31st March and will see the 0% threshold drop from £250,000 back to £125,000. The first-time buyer 0% threshold will also fall from £425,000 to £300,000 in March meaning that those wanting to get onto the property ladder face higher costs and could need to stay for longer in rental properties.

Surprise

Mortgage Finance Brokers believes the surprise rate increase penalises landlords and property investors, gives them no time to act and disincentivises them from providing much needed rental housing.

Writing in the PDPLA newsletter, MD Gavin Richardson (pictured) says that if landlords or potential landlords are put off from purchasing, the shortfall of properties will only increase and consequently, so will demand. Rents will rise even higher which will help mitigate the higher initial cost of purchasing.

“Reeves also failed to extend the temporary Stamp Duty thresholds, which will leave many first-time buyers unable to save enough to get onto the property ladder and achieve the coveted homeowner status,” adds Richardson. “Again, this will drive up demand for rental properties.”