Mr Osborne said: "more and more homes are being bought as buy-to-lets or second homes", and that many of them are cash purchases that aren’t affected by the restrictions introduced in the Budget on mortgage interest relief.
“Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy. So I am introducing new rates of Stamp Duty that will be 3 per cent higher on the purchase of additional properties like buy-to-lets and second homes. It will be introduced from April next year and we’ll consult on the details so that corporate property development isn’t affected.
“This extra stamp duty raises almost a billion pounds by 2021 – and we’ll reinvest some of that money in local communities in London and places like Cornwall which are being priced out of home ownership. The funds we raise will help building the new homes."
It seems that this move is aimed at the small, private landlords as corporate investment is exempt. Indeed, mortgage lender Kent Reliance saw a record-breaking 300% increase in mortgage applications made via a limited company in September this year compared with September 2014.
The average value of a buy-to-let property is in the UK is £220,726. The 3% rise in stamp duty would introduce an additional up-front charge of £6,622.
The increase in stamp duty for buy-to-let properties follows the cuts to tax relief on mortgage interest planned for 2017 – 2020. This limits the relief available for individual buy-to-let owners to 20%. (This is currently as high as 45%.)
“The buy-to-let market is already feeling the impact of recent changes,” says Jason Dyer of JTM Homes. “Many of our landlords are keen to complete their buy-to-let purchase before the April deadline for increased stamp duty.”
He adds: “We’re used to moving quickly and securing the best price for properties to suit our clients. If you have been thinking about entering the buy-to-let market or expanding your portfolio, now is the perfect time to act.”
Are you interested in entering the buy-to-let market? Beat the 3% stamp duty increase... talk to JTM Homes.