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A surprise stamp duty holiday has given hope to thousands of landlords. In a bid to kick-start the housing market, chancellor Rishi Sunak has raised the threshold at which stamp duty land tax kicks in. Buyers are now exempt from stamp duty on the first £500k of a property purchase (the threshold was previously £125k). This temporary SDLT holiday will last until March next year.
Landlords and other second-home owners will still have to pay the 3% SDLT surcharge, but any extra stamp duty has been axed. This is good news for landlord investors, who could potentially save thousands if they decide to add to their property portfolio.
London Landlords Enjoy the Biggest Savings
The Treasury has estimated that 90% of buyers will save money if they purchase a property, with the average cost saving likely to be £4,500. In London, the gains will be even greater. The average property value in London is £485,794, but 20% of landlords pay more than £500k for an investment property. As such, experts from property agent Hamptons have calculated that London investors could save on average £7,240.
The savings will also apply to landlords who move their property portfolios into a limited company, so if this is something you have been dragging your feet over because of the cost implications, you can now take advantage of the more favourable tax treatment.
Housing Policy Reversal
Experts are calling this a huge reversal in housing policy.
“The previous focus on first-time buyers and home ownership has been set aside and the priority now appears to be supporting transactions, irrespective of who is buying,” said Neal Hudson from Residential Analysts.
Indeed, for many, the chancellor’s unexpected addition to his summer statement came as a huge surprise, albeit a welcome one. However, the Chartered Institute of Taxation has offered a note of caution:
“This cut should help to revive the housing market, but the jury is out on whether it will mostly benefit buyers or sellers. In practice, it may simply stabilise prices.”
It’s also likely that the stamp duty holiday will have most effect in the south, where property prices are much higher. In the north of England, many transactions are below the SDLT threshold, so the majority of buyers won’t gain all that much.
The stamp duty holiday will apply to all current transactions in progress, even landlords who have exchanged contracts and are waiting to complete. Transactions that completed on 8 July are also eligible.
Green Homes Grant
In other good news, the Green Homes grant will also benefit landlords looking to make energy efficiency improvements to their rental properties. Homeowners will be able to apply for grants of up to £5,000 for projects such as replacement windows, loft insulation, and eco-boilers. Applications will be made online and the work will be carried out by approved installers.
Many landlords own older housing stock, so this free grant from the government will be most welcome. It will also be great for tenants, who could save up to £300 per year on their energy bills.
The details of the scheme have yet to be published, but we’ll keep you posted.
Are you planning to increase your property portfolio in the wake of the chancellor’s announcement? Let us know!
