Calls are being made for the higher rate of Stamp Duty to be cut in next week’s Budget - a move that would be welcomed by buy-to-let investors who pay an additional surcharge on any additional properties they own.
Industry experts say the top rate of Stamp Duty is detrimental to the growth of the market.
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2016 SDLT changes
Changes to Stamp Duty brought in last year mean investors pay 15 per cent in Stamp Duty on properties costing more than £1.5million while homeowners with no other properties pay 12 per cent. For properties valued between £925,000 and £1.5million, it is 13 per cent compared to 10 per cent respectively.
For a home costing £2million, this equates to £213,750 in Stamp Duty for a property investor compared to £153,750 for a sole residential purchase.
Mortgage brokers weigh in
Ray Boulger at mortgage brokers John Charcol, called for the top rate to be cut to 10 per cent, which would mean a total Stamp Duty of 13 per cent for buy-to-let investors on more expensive investment properties.
According to Boulger, this cut would encourage transactions, so although the government would take in less tax per property sale, the greater number of property sales would more than fill the gap.
Not only would the Government be able to bring in extra tax from Stamp Duty, more transactions would boost trade for estate agents and the resulting amount of tax they pay – and they’re not the only industry whose trade would benefit from increased sales.
Current SDLT rates are harming the property market
Since former Chancellor George Osborne introduced the Stamp Duty in April last year, sales of multi-million pound properties have slumped, with a 33 per cent drop in homes costing between £1million and £2million during the last six months of last year.
However, in spite of the potential benefits, the announcements made in the pre-budget and the recent housing white paper suggest there will be few, if any changes that could benefit landlords. Boulger remains hopeful, but we will have to wait until next week to find out.
What are you hoping to see in next week’s budget? Let us know in the comments.