George Osborne’s decision to raise stamp duty for buy-to-let landlords will cost tenants an extra £55 a month in rent, according to Kent Reliance.
Osborne announced an additional 3 per cent stamp duty on second homes and buy to let properties in his Autumn Statement, adding thousands in tax. A property worth £175,000 would have cost £1,000 in stamp duty this year but will cost £6,250 from next April.
Buy-to-let is on the rise. Lending to landlords was higher in the first nine months of 2015 than in any of the last six years.
Rather than dampening the buy-to-let market and free up housing for first time buyers, the increased rent will make it harder to save for a deposit as tenants face higher monthly rent, mortgage lenders have warned.
“Tinkering with the cost of lending by subsidising first time buyers or penalising landlords is not the way to make housing more affordable. The only way to do that is to build more homes,” said Andy Golding, CEO of OneSavings Bank, which owns Kent Reliance.
Landlords will also face greater tax on the profits from their properties from April 2017, with minimum tax relief dropping from 45 or 40 per cent to just 20 per cent.
Kent Reliance, a mortgage lender, said it had seen buy-to-let lending to limited companies double to 5,000 per month following the budget announcement, as landlords looked to register as companies to avoid the costs of personally owning multiple properties.
A company structure means investors are taxed on profits at corporation tax rates, with tax relief for business costs such as mortgage interest, although there are other costs to consider.
Proposals, currently under consultation, to exclude companies with more than 15 properties from the extra stamp duty could push more landlords to incorporate.
Source:- http://www.independent.co.uk/news/business/news/housing-crisis-osborne-s-3-stamp-duty-on-buy-to-let-properties-to-raise-rents-by-55-a-month-a6758541.html
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