16 May 3 per cent stamp duty on buy to let landlords
buy-to-let landlords should to be made to “squeal” under George Osborne’s crackdown to help people to buy homes, a Treasury minister has suggested.
The Residential Landlords Association said it was “shocked” by the response of the minister, during a private meeting earlier this month as it tried to raise concerns about a crackdown.
George Osborne, the Chancellor, has imposed a 3 per cent stamp duty on buy to let landlords and from next year will curb tax relief on mortgage interest.
Alan Ward, chairman of the Residential Landlord’s Association, said he did not want to name the minister to spare him “embarrassment”.
He said: “We went last week to raise landlord’s concerns with specific reference to the mortgage interest relief and the Government’s taxation policies towards private landlords.
“We wanted to make the case that we have a history of a significant contribution to housing and that this crackdown is unfair and prejudiced.
“The minister’s comment was that if landlords are squealing then the Government will take the view that the medicine is working.
“The minister made the point that the Government is determined to increase the number of homeowners, and then re-iterated the issue about first time buyers.
“We were all a bit taken aback by the comment, we could hardly believe our ears. The government’s idea of medicine is potentially lethal for landlords and tenants.
“Why would the Chancellor want to dish out a deadly dose to swathes of landlords who contribute a vital part of the nation’s housing?”
The Government is facing a growing backlash from senior Conservative MPs who are concerned about the impact of the crackdown.
The Telegraph understands that six Tory MPs are prepared to champion landlords amid concerns that they are being unfairly treated.
- Anyone who buys additional residential property, including second homes and buy-to-lets, will have to pay an extra 3 percentage points in stamp duty from April 1, 2016.
- The additional charge applies above the current “stamp duty land tax” rates. This means there will be 3pc tax (currently zero) to pay on homes worth up to £125,000, 5pc tax (instead of 2pc) on homes that cost between £125,001 and £250,000, and 8pc (currently 5pc) on homes worth between £250,001 and £925,000.
- Homes worth up to £1.5m will be subject to 13pc stamp duty and those over this amount will incur a 15pc charge.
- In practice this means that someone buying a £450,000 house will have to pay an extra £13,500 of tax.
- Anyone buying a second home has 36 months to sell their original property. They can then get a refund on the extra tax.
- In addition, anyone who sold their home before November 2015 but does not currently own their own home has until November 2018 to buy a new one without paying the extra tax.
Graham Brady, the chairman of the 1922 committee of Conservative MPs, said: “There are some legitimate policy objectives in terms of trying to ensure supply for people buying. It isn’t a completely one way issue.
“But on the other hand a lot of people are involved in residential letting. It is a perfectly proper and legitimate business and makes a very important contribution to labour market flexibility and mobility.
“I think there are some quite serious concerns about elements of it [the crackdown]. There are questions about the different treatment of some businesses from others. There are some quite legitimate concerns.”
The Chancellor has announced a series of policies targeting buy-to-let landlords in a bid to “level playing-field” between those buying a home to let, and those who are buying a home to live in.
From last April buy-to-let investors face a 3 per cent stamp duty surcharge, and from 2017 they will only be able to claim tax relief on their mortgage payments at the basic rate of 20 per cent.
A Treasury spokeswoman said: “It is right that people should be free to purchase additional properties such as buy-to-lets or a second homes, however this can impact other people’s ability to get on to the property ladder.
“Higher rates of stamp duty on additional properties will help double the affordable housing budget and support even more first time buyers fulfil their ambition of owning their own home.”