Double whammy for buy-to-let landlords
George Osborne dealt a double blow to buy-to-let owners in his Autumn Statement.
The first bitter pill was the introduction of an increased rate of Stamp Duty Land Tax (SDLT) payable on the purchase of second properties worth more than £40,000 from April 2016.
An additional 3% will be payable on top of the standard SDLT residential rates (separate rules apply in Scotland).
Mr Osborne said the new surcharge, which will see an additional £5,520 slapped onto the average buy-to-let purchase of £184,000, would raise £1bn extra for the Treasury by 2021.
Secondly, the chancellor announced that Capital Gains Tax (CGT) payable on second homes will need to be paid within 30 days of a disposal from April 2019.
This could bring forward the payment of tax by almost 22 months for some sales.
Of course, these measures are in addition to the proposals to restrict mortgage interest relief on buy-to-let properties, which were unveiled at the Summer Budget.
So why does the chancellor have buy-to-let owners in his sights? More importantly, is buy-to-let still an attractive proposition for wealthy individuals looking for a decent return on their investment?
Regarding Mr Osborne’s thinking, aside from the boost to the Treasury’s coffers it seems he is keen to win the support of younger voters belonging to what has been dubbed Generation Rent.
“There is a growing crisis of home ownership in our country. Fifteen years ago, around 60% of people under 35 owned their own home; next year it’s set to be just half of that,” he said in his speech to the House of Commons.
As for the viability of buy-to-let as an investment, only time will tell. Some commentators are predicting a surge of investment before April 2016.