For example, a landlord buying a property for £200,000 prior to April 2016 would pay just £1,500 in SDLT. Now, a landlord purchasing the same property would see their bill rise to £7,500.
In 2015, Chancellor George Osborne introduced measures that he hoped would ‘level the playing field’ for first-time buyers by reducing the many tax concessions available to buy-to-let landlords, deterring more from entering the market and encouraging some to sell their properties. Landlords accustomed to claiming relief worth 40% or 45% will find their relief restricted to the basic rate of 20% once the changes are fully implemented in 2020. In addition, from April 2017, the 10% wear-and-tear allowance will go, meaning landlords will only be able to deduct costs they actually incur.
It’s been estimated that landlords in London and neighbouring counties will need upwards of 20 months’ rent to cover this higher level of SDLT. Landlords seeing their rental yields fall as a result of these tax changes will inevitably press their tenants for higher rents to cover their income shortfall.
Sheri-Anne Mizon, Partner at Attwaters Jameson Hill, says:
“While it remains to be seen if these moves will act as a major deterrent to buy-to-let landlords and free up much-needed housing stock for first-time buyers, tenants may feel the effects of the changes in legislation sooner rather than later.”