Chancellor says Stamp Duty hike on buy-to-let ‘justified’

Chancellor Rachel Reeves increases Stamp Duty on investment property from 3% to 5% from tomorrow in the Budget.

Rachel Reeves

Stamp Duty on buy-to-let properties and second homes will increase from 3% to 5% from today, Chancellor Rachel Reeves (main picture) announced in her Budget.

In a move that will hit landlords’ finances, Reeves said it was necessary to help fill a £22 billion black hole in the public finances.

Justifying the hike, her department’s briefing notes following the Budget said: “The government is supporting first-time and main home buyers by increasing the Higher Rates for Additional Dwellings of Stamp Duty Land Tax.

“These higher rates apply to purchases of second homes, buy-to-let residential properties and companies purchasing residential property and the increase will provide those looking to move home or purchase their first property with a comparative advantage over those purchasing additional property.

“This is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence. Those who exchanged contracts prior to 31 October 2024 are not affected by this rate increase.”

Capital Gains Tax

She also raised Capital Gains Tax, with the lower rate going up from 10% to 18% and the higher rate up from 20% to 24%. But the rates on residential property will remain at 18% and 24%, much to many landlords’ relief.

Inheritance tax

Estate agents will see employers’ National Insurance contributions go up from 13.8% to 15%. And the threshold at which employers start paying drops from £9,100 to £5,000.

Reeves says she will extend the Inheritance Tax threshold freeze for a further two years to 2030. So, the first £325,000 of any estate can be inherited tax-free.

Non-dom rules

Many prime agents in London and the Home Counties will be worried to hear that Reeves has abolished ‘non-dom’ status to “ensure that people who live here pay their taxes here” a measures which previously many agents have said could reduce the number of wealthy buyers in the capital and elsewhere.

She said: “The Budget is closing loopholes in the tax system, including ending the unfair
current treatment of carried interest and replacing the non-dom tax regime with a
new residence-based system to make sure that everyone who makes their home in
the UK pays their taxes here”.

The Chancellor announced £40 billion of tax increases in the Budget overall.


2 Comments

  1. I’ll put this in which I’ve put elsewhere which is relevant

    Yes they want us out of business, but have nothing to house the 11 million tenants we house.
    Shame Govt and Councils still not learn’t Tenants Rent PAYS FOR EVERYTHING.
    Increase our costs and outgoings, u increase the tenants rent. And when it stops adding up, we sell.
    They do need to start coming asking us
    What can we do for u Mick so u stop selling your houses and house our people we paying 3k pm per person for each hotel room where some families have been in 2 years.
    Although I think Reeves in her budget has been gentle to most Landlords realising she could do without any more selling until these 3 million fairy tale homes are built.
    Bad for the new buyers though the Stamp Duty which we know is gonna be more expensive rents to make the tax back up.

  2. In a shock announcement that nearly made me fall off the sofa as I watched the Chancellor of the Exchequer Rachal Reeves in full flow, she stated that as of midnight on the 30th of October 2024, anyone buying a second home and completing will be paying SDLT at a whopping 5% rate up to £25,000, and at a rate of 10% above that. At present the level is 3% for such transactions. So SDLT would on a £280k purchase of a second home amount to £15,500, hugely impacting on the landlord and holiday home marketplace.

    It is clear that this government is for the workers or rather, in a misguided way the ‘working class’ which Starmer and his cabinet seem to think may not be Landlords. Any rise in the cost of buying a property asset to then rent to a tenant, increases the rent that is being sought. Extra taxation just means higher rents, less landlords buying property which in turn reduces supply of rentable property which inflates rents – after all the PRS is a marketplace.

    Typically a large swathe of landlords each year sell at least one property that they rent out, typically the one that is problematic and needs a lot of maintenance or has a diminishing lease etc, and it is ‘swapped’ for another new property that is added to the portfolio. With the 5% SDLT coming in, this may stop this happening.
    With the Renters’ Reform Act on the horizon, overtly weaponizing the protection for tenants at the cost of the rights of a Landlord to do what they like with a property they have financed and own, we may see a growing exodus of Landlords from the PRS. Now Reeves et al may thing ‘good riddance’ but of course where then do we house people who have nowhere to live?

    Labour will also fail to deliver the mythical 300,000 homes a year, yes they will probably turbo charge social homes being built, but that is not going to move the dial, and of course who pays for this housing stock – we do the workers and non-workers of the UK. So far this year in one three month period less than 30,000 new homes were delivered – so those sums are not going to add up.
    Do not even get me started on the class war that seems to be breaking out … I thought all this was a relic of the 1970’s when I was growing up, but now with the Chancellor hanging a picture of Ellen Wilkinson a founding member of the British Communist Party in the chancellor’s office I see old labour is still thriving.
    I am not looking forward to a socially planned way to live my life – whoever gets to run the country should rule in the interests of all stakeholders. This £40Bn budget puts the weight squarely on the SME’s that actually provide the revenue that runs the country, dampen that we get a recession.
    And on a personal and business level, here at Proptech-PR we work daily with 136 proptech founders with a combined market capitalisation of £1.47Bn and my mobile is already pinging and my other messaging systems are going to meltdown. So I think yes Rachal has stimulated the tech industry and real estate vertical on the whole, but not in the way she would like, as the Alternative Investment Market is going to see a continued number of people cashing out.

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