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Stamp Duty Hike Sends Shockwaves Through Buy-to-Let Market

8th November 2024

A sharp increase in stamp duty on buy-to-let properties has sparked fears of a mass exodus of landlords from the market. This move, intended to cool the overheated property market, could backfire by reducing the availability of rental homes and driving up rents, experts warn.

Landlords are now faced with a difficult choice: absorb the increased costs, sell their properties, or abandon planned investments. The long-term consequences for both landlords and tenants remain uncertain.

Estimated Reading Time: 4 Minutes

Last Edited: 14:44 Friday 8th November 2024

Stamp Duty Hike Sends Shockwaves Through Buy-to-Let Market

A recent surge in stamp duty on buy-to-let properties and second homes has sent ripples of concern throughout the UK property market. Experts warn that this increase, which took effect at midnight, could lead to a significant drop in buy-to-let purchases, further exacerbating the existing housing crisis.

“A Whack With a Hammer”

Peter Stimson of MPowered Mortgages didn’t mince words, describing the 2% stamp duty hike as a “whack with a hammer” for buy-to-let landlords already struggling with previous tax increases and rising interest rates. He predicts a further decline in buy-to-let mortgage applications, which have already plummeted in recent years.

The Ripple Effect: Higher Rents and Fewer Choices for Renters

This decline in buy-to-let investment could have serious consequences for renters. With fewer landlords entering the market and existing landlords potentially selling their properties, the supply of rental homes could dwindle, pushing rents even higher and limiting choices for tenants.

Zoopla Predicts a Slump in Demand

Zoopla’s head of research, Richard Donnell, echoes these concerns, forecasting a slump in demand for buy-to-let properties due to the increased stamp duty. He points out that this tax disproportionately affects buyers in southern England, particularly London and the South East.

A Glimmer of Hope: No Change to Capital Gains Tax

Despite the gloomy outlook, Donnell finds some solace in the fact that Capital Gains Tax for landlords remains unchanged. He emphasizes the importance of retaining landlords in the market to provide rental options and prevent excessive rent increases that disproportionately impact low-income earners.

The Bigger Picture: A Housing Crisis in Need of Solutions

This situation highlights the urgent need for comprehensive solutions to the UK’s housing crisis. While cooling the property market is a valid goal, policies that discourage buy-to-let investment without addressing the underlying issues of housing supply and affordability could have unintended consequences for both landlords and tenants.

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