George Osborne sabotages private landlords even further with stamp duty hike

Chancellor George Osborne dealt yet another blow to private landlords, by introducing a further 3 per cent surcharge on stamp duty for new properties in his Autumn Statement and Spending Review. ”This will certainly make buy to let less attractive for aspiring landlords,” says mortgage broker David Hollingworth, of London & Country. “It will put the buy-to-let dream out of reach for many people.”

Mark Harris, CEO of mortgage brokerage firm SPF Private Clients, calls this “a truly aggressive attack,” adding that “the 3 per cent surcharge is a staggering kick in the teeth for landlords and could have a devastating impact on the buy to let market.”

While Osborne says he has made this decision in order to help out first time buyers, this is incredibly discouraging for anybody who hoped to invest in  buy to let as a means of saving for their retirement, forcing over-55s to consider other means of investment, each of which carry their own risks.

“The Chancellor said he wanted to deter the buying-up of property by the super-wealthy living overseas but it is those at the lower end of the market who may be forced out,” says Karen Bennett at advisor service Unbiased. “That will only leave more property for the super-rich to snap up.”

What Osborne also seems to have failed to consider are the repercussions of the stamp duty hike. For instance, what’s to stop a massive surge in house prices in central London and other desirable areas, as desperate investors rush in to snap up properties ahead of the deadline?

And then there are the longer-term consequences to the private rental sector. The Treasury stands to make £1 billion a year from this move, but that puts both landlords and tenants in an even more financially strained position. “Landlords will pass on their increased costs to tenants by charging higher rents and spending less on maintaining their properties,” warns David Cox, Managing Director of the Association of Residential Letting Agents. And of course, by depriving the market of new investment, Osborne also runs the risk of limiting the lettings supply, in the middle of a grave housing shortage.

All of which is to say that these latest developments will further move landlords away from using expensive letting agents. As it becomes increasingly important to reduce overall property costs in order to offset the fiscal impact, more and more landlords will find that using an alternative to high street letting agents is a cost-effective solution, as it saves them 5% to 10% of their annual property income.

Find out how Rentify can help you let and manage your property.

George Spencer is CEO at Rentify.