Angels Sales & Lettings
Boris Johnson’s stamp duty plans – what do landlords need to know?
19 August 2019 5439 Views
Whether you’re a first-time landlord or an experienced one, there are frequent regulatory changes in the buy-to-let sector that you will need to be aware of, such as the phasing out of mortgage interest tax relief and, more recently, proposed changes to Section 21.
Following Boris Johnson’s appointment as Prime Minister in July, the industry is waiting with bated breath on what other policies he and his new team at the Ministry of Housing, Communities and Local Government are planning to implement.
Here at Angels Sales & Lettings we take a look at how Johnson’s move into 10 Downing Street could potentially affect landlords in the UK.
What are Johnson’s plans for stamp duty?
While housing wasn’t the main focus of his campaign, Johnson pledged that he would cut stamp duty on sales under £500,000 and reduce the top rate of stamp duty on homes worth more than £1.5 million from 12% to 7%.
The PM also suggested he may be willing to cut stamp duty further at the lower end of the market to help first-time buyers get on the property ladder. At the high end of the market, meanwhile, he has hinted that he may reverse the stamp duty changes introduced by former Chancellor George Osborne.
Wider reform backed by Johnson also includes proposals to switch the stamp duty burden from buyers to sellers. With this, downsizers would face a larger tax charge to leave their homes.
What does this mean for landlords?
Currently, property purchases pay no tax on the first £125,000 of a property purchase, while there is a stamp duty rate of 2% on homes worth between £125,001-£250,000. Homes worth £250,001-£925,000 requires 5%, while a home worth £925,001 is 10%.
On top of these rates for owner occupier purchases, landlords or people purchasing second properties are required to pay a 3% stamp duty surcharge.
With Johnson previously mentioning that he favours home ownership over renting, it’s no surprise that the majority of UK landlords believe that he has no plans to reinvigorate buy-to-let,
It’s possible that a stamp duty reform would encompass the 3% levy attached to the purchase of second properties, which could have a huge impact on the private rented sector – though this was not actually mentioned in Johnson’s campaign.
However, if the ‘landlord second home tax’ was dropped, research suggests that just 10% of properties bought in 2019 would have been liable for stamp duty – meaning the majority of landlords would be considerably better off.
With things up in air at the moment, it’s important that landlords factor these costs into their purchase plans so that they’re fully prepared. Of course, a good agent will be able to advise you accordingly throughout the lettings process.
At Angels Sales & Lettings, we offer a range of services for landlords to ensure they get the best out of their rental experience.
For more information on letting in Enfield and Newham, please get in touch with us on 0800 043 6678.
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