Fears that landlords could face another stamp duty hike

There are fears that Chancellor Rachel Reeves might unveil an additional increase to the stamp duty surcharge for second home purchases during her Spring Statement tomorrow (26 March).

Property specialists, including television icon Phil Spencer, are bracing for what could be another blow to the buy to let sector.

During last year’s Autumn Budget, Ms Reeves stunned investors by boosting the stamp duty land tax (SDLT) surcharge from 3% to 5% for those buying additional properties.

This added thousands of pounds to the cost of acquiring holiday homes or rental investments in England and Northern Ireland.

Now, as the Chancellor prepares to address Parliament, speculation is mounting that she could push this levy even higher.

Possible stamp duty will rise

Among them is property expert Phil Spencer, who told thisismoney.co.uk: “Scotland’s equivalent of this second home ‘surcharge’ is 8%, so it’s possible that the stamp duty surcharge could be moved closer to the Scottish level.

“There’s more chance of the Chancellor raising stamp duty even further, given the government’s current financial challenges, if she does opt to tweak the rules, she’s only likely to move the tax rates one way — and that’s up.”

He warns that such a hike might deter prospective landlords – and shrink the rental market.

Mr Spencer added: “Another stamp duty increase could prompt more would-be landlords to conclude that the sums no longer add up and abandon their plans.”

He went on to warn that a third of Brits don’t own their home and the lack of supply will push rents up.

Reeves will be cautious

However, not everyone anticipates further changes and Jimmy Waight, the head of sales at John D Wood and Co, suggests caution will prevail.

He told the news site that the government won’t push up stamp duty rates ‘so soon after the Autumn Statement’.

Mr Waight said that the statement won’t be a major fiscal event – and the Chancellor will be wary about any policy that will dampen the economic outlook.

What the property sector predicts

Meanwhile, the wider property industry is clamouring for relief and among them is Jonathan Handford, the interim managing director of Fine & Country.

He is urging a drastic cut to stamp duty to invigorate the market.

Mr Handford explains: “At a time when borrowing costs remain high, the additional burden of stamp duty acts as a deterrent, discouraging homeowners from moving.

“Reducing stamp duty would not only make it more affordable to move, but the resultant increase in transaction volume would likely offset any shortfall in per-transaction revenue for the Treasury.”

He also advocates reviving a modernised Help to Buy scheme to aid first-time buyers and calls for planning reforms to tackle Britain’s housing shortage.

Mark Michaelides, the chief commercial officer at Molo, adds that the buy to let sector is hanging on the Office for Budget Responsibility’s latest economic forecasts.

He said: “Our BTL market continues to be highly sensitive to these economic indicators.

“We might expect some first-time buyer support to soften the blow of the upcoming stamp duty threshold changes.”

Propertymark‘s head of policy, Timothy Douglas, said: “With housing playing a key part in the UK government’s plan for change, the Spring Statement must ensure government policy protects the delivery of more social and affordable housing and local authorities have the resources they need across planning, enforcement and infrastructure.”

He adds: “Policymakers must also fully understand the need to reform housing benefits so they reflect real rental costs, and the UK government must continue to target resources to tackle the cladding crisis and improve building safety to help boost economic growth.”

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