Stamp Duty hike to ‘damage’ rental market warn auctioneers

Last week’s 2% increase in Stamp Duty on second homes and buy-to-let properties will lead to investors exiting the PRS which will reduce the supply of homes to rent and lead to yet more rent rises warns Propertymark NAVA’s Stuart Collar-Brown (pictured).

The new rate applied from 31 October 2024, when it went up from 3% to 5%.

The increase prompted Propertymark to call on the Government to revisit the Stamp Duty surcharge on second homes and buy-to-let properties as it says it hinders investment and exacerbates rental supply shortages. Instead, it is advocating targeted tax relief to encourage investment.

This will have an impact on investors and likely lead to them exiting the market.”

Collar-Brown, NAVA Propertymark’s President, adds: “Following Wednesday’s budget announcement on the increase in SDLT on second homes and rental properties from 3% to 5%, coupled with many local authorities doubling council tax on second homes, there is little doubt that this will have an impact on investors and likely lead to them exiting the market, perhaps quicker than they had intended to with less homes to rent leading to increases in rents across the board.

“Much of the pre-budget chatter was surrounding Capital Gains Tax increases but fortunately the rates for residential properties have remained unchanged at 18% (basic) and 24% (higher rate).

“This will be a relief for investors but those with non-residential assets in their portfolios will see an impact to their long-term gains with these rates increasing to be aligned with residential properties.

Mixed reactions

“The Budget will no doubt have mixed reactions, with some celebrating the unchanged CGT rates for residential properties but the increase in SDLT will surely have a negative effect on private rental sector stock levels and thus possibly increase rent due to further lack of availability.”