The death of the buy to let market! With George Osborne’s announcement of rising stamp duty this coming April by 3 percent on buy-to-let homes, the property industry is now in uproar. People view this as another assault on buy-to-let landlords by further taxing their profits. It is the second time that landlords have been hit in the last six months since Osborne got rid of the relief on mortgage interest payments during his pre-election budget.

Stamp duty is currently 0 percent on homes valued under £125,000, then 2 percent on homes which are valued between £125,000 and £325,000 with a 5 percent raise on the next £675,000, 10 per cent raise on the next £575,000 and 12 per cent raise on homes valued above £1.5 million. Owners of second homes must also pay capital gains tax on the sale of their properties of between 18 and 28 per cent.

So now, with the current stamp duty – if you purchase a house at £125,000 you would pay no tax at all compared to the £3,750 you will start paying in April. If purchasing a house at £200,000 the bill will now leap from £1,500 to £7,500. If a property costs £275,000 you would get the stamp duty charge of £12,000 rather than the current charge of £3,750. This is quite a significant jump for buy-to-let landlords and many people expect this to affect the market in different ways.

Some first time buyers welcome this action as it will prompt some landlords to withdraw from the market and some to not even enter the market. With this, the demand shock should reduce the pricing of houses which will in turn make buying a first home more affordable.

But will this affect the lettings market? With landlords not around to bid up sales prices they also will not be there to bid down lettings prices – which will most likely see rent prices rise.

What do you think about the new stamp duty for buy-to-let investment – will it help the market and help first time buyers or will it create a big mess?

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