Stamp duty increase to cost landlords up to 14 months of income

Last month’s Autumn Statement brought the news of an increase in stamp duty, and it looks like the impact could be pretty severe on the buy-to-let community.

3 is the not so magic number

The tax comes into force in April of next year and brings with it a new 3% surcharge, designed to impact only those buying second properties.

As such, landlords are amongst the most affected and a drop in yields is expected, with recent analysis suggesting that the levy could damage buy-to-let profitability.

So, how out of pocket could Britain’s landlords be?

Countrywide chaos

The analysis – conducted by Countrywide – suggests that those buying in the South West could be worst affected, with the stamp duty increase anticipated to eat up around 14 months of income.

Elsewhere, a 12 month shortfall could be seen by landlords in the North East, whilst those investing in London, its surrounding counties and Yorkshire could see lost income of some eleven months.

Landlords in the Midlands and North West, meanwhile, face ten and eight months of lost income respectively.

End of the road, or just a bump?

Speaking on the findings, Johnny Morris, research director at Countrywide, said: “The stamp duty increase will impact landlords’ purchasing power.

“Many entering the market will be faced with a choice between making a lower offer when buying or having to cover the additional costs themselves, impacting yields.

“Most landlords view property as a long term investment, on average holding a property for 17 years and larger investors will be exempt from the higher stamp duty rate.

“This means over the long term the private rented sector will continue to grow, but there’s likely to be a few lumps and bumps along the way as landlords get to grips with and adapt to the changing environment.”

What do you make of the recent stamp duty changes? Will they put you off buy-to-let? Let us know in the comments section below.

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