Stamp duty rise looms over landlords and second home buyers

·2-min read
Rishi Sunak
Rishi Sunak

The Chancellor was close to increasing the stamp duty surcharge paid by landlords and buyers of second homes in the Budget, documents published yesterday have suggested.

The Government had planned to increase the 3 percentage point surcharge on additional property purchases to 4 percentage points, according to the economic and fiscal outlook published by the Office for Budget Responsibility.

The OBR said: "A 3pc surcharge on additional property purchases was introduced in April 2016. It has been raised to 4pc in this Budget.

"HMRC has analysed the response to its introduction and found that it was strong."

However, an increase to the tax surcharge was not ultimately announced by Rishi Sunak, suggesting the policy was pulled before the Budget.

Experts have predicted the rise may be announced at a later date.

Neal Hudson of BuiltPlace, a housing market analyst, said the Government could be poised to increase the surcharge for investors as part of its drive to support first-time buyers.

"We can presume there were detailed conversations about increasing the surcharge, which were changed at the last minute," Mr Hudson said.

"Landlords and second homeowners were included in the stamp duty holiday this year and last, and some would argue this has contributed to the severe housing stock we are currently faced with.

"It wouldn't surprise me if the Government was looking at this to rebalance the market and make up for some of the failings of the holiday."

Since 2016 landlords have had to pay a 3 percentage point stamp duty surcharge on buy-to-let purchases. This change, and the tapering of mortgage interest tax relief, is thought to have forced a quarter of a million to sell up and exit the market entirely.

An OBR spokesperson said the reference to stamp duty was included in its documents "in error".

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting