Fears are growing that Rachel Reeves’ hike in stamp duty for additional homes may deter buy to let investors. 

NAVA – Propertymark’s auctioneering arm – is concerned that the 2% increase on second homes or buy to let residential properties will lead to investors exiting the private rental market and reduce the supply of homes to rent, thereby leading to further rent rises for tenants. 

Propertymark claims that the 3% SDLT surcharge on second homes and buy-to-let properties should be revisited as it hinders possible rental property investors, which then escalates the housing supply shortage,. Instead, Propertymark advocates targeted tax relief to mitigate this effect. 

Additionally, Reeves has raised the lower rate of Capital Gains Tax from 10 per cent to 18 per cent, and the higher rate from 20 per cent to 24 per cent. Despite this, residential property will stay at 18 per cent and 24 per cent respectively.   

Stuart Collar-Brown, NAVA Propertymark President, says: “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. 

“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.” 

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