Extra Stamp Duty Costs ‘Failing to Deter Landlords from Buying Up Properties’
The stamp duty levy introduced almost two years ago by the government in an effort to limit the growth of buy-to-let property ownership in the UK has not yet had the desired effect.
According to analysis of official data, the government’s decision to add 3 per cent to stamp duty charges has only had the effect of significantly increasing HMRC takings in recent quarters, rather than reducing the appetite for buying properties among investors and landlords.
The government’s extra stamp duty levy has been dubbed the “landlord tax” and was announced as official policy during the chancellor of the exchequer’s 2015 Autumn Statement.
The apparent intention of the policy was to provide a disincentive for landlords against buying multiple properties in ways that can ultimately make it more difficult for first-time buyers to make their way on to the housing ladder.
However, in practice, the disincentive seems to have had little impact and is instead understood to have lead to roughly £2 billion more being paid as stamp duty to HMRC during 2016-17 as compared with the previous 12 months.
The analysis that generated those figures was carried out by the accountancy firm Blick Rothenberg, which has pointed out that rising house prices were also partly responsible for the increase in stamp duty payments on a national basis.
“The government will need to urgently consider whether the additional 3 per cent stamp duty policy is helping achieve fairness in the property market, or if it is creating more problems than it is solving,” said Robert Pullen from Blick Rothenberg.
“The policy intention was always stated to be to realign the residential property market to make it fairer for first time buyers.
“It is becoming clearer, however, that as prices continue to rise the measure has succeeded only in generating extra tax for HMRC.”
Blick Rotherberg’s analysis of the UK’s stamp duty situation was based on details of tax revenues taken in this context during the 12 months to July 2017. Those revenues were roughly 20 per cent up on the same figure for the previous year.
The so-called landlord tax was introduced by then chancellor George Osborne in 2015 with the stated aim of preventing landlords from “squeezing out families who can’t afford to buy a home”.