Proposed reforms to stamp duty could offer dividends for the property market, with buy-to-let landlords set to reap the benefits should the Government make changes to the current system.
During his leadership campaign, Prime Minister Boris Johnson pledged to cut stamp duty in the cases of sales under £500,000 and over £1.5m, alongside a suggestion that further cuts could be made to help those at the lower end of the property market in an effort to assist first-time buyers.
At present, landlords or other homebuyers are required to pay a 3% stamp duty surcharge when purchasing a second property, a significant deterrent for the Buy-to-Let sector at a time when homes worth between £250,001 and £925,000 are already subject to a 5% surcharge.
But research suggests that just 10% of properties purchased in 2019 so far would have been liable for stamp duty should the second property tax be removed, leaving landlords in a healthier position financially and encouraging them to invest in Buy-to-Let homes. The impact on the market as a whole is easy to see; more properties purchased makes for a healthier market as a whole, alongside offering more options for renters.
Managing Director of mortgages.online Paul Flavin offered the following on the current state of play: “The increased stamp duty payable on buy-to-let purchases, and the removal of the ability to offset mortgage costs has put many investors off the property market, with a knock on effect of reducing the stock of rental properties.
“We have two basic messages for the Chancellor (Sajid Javid). Relief for buy-to-let investors and measures to stabilise the economy with clarity once and for all on Brexit, are both needed urgently. We would encourage the Chancellor to look again at the negative impact these measures have.”
Plans to switch stamp duty from buyers to sellers in an effort to encourage more first-time buyers to enter the market have already been quashed by Javid, but it’s clear that reforms on stamp duty are required in order to encourage buyers, whether landlords or otherwise to purchase property.