It is perhaps unexpected from a Tory government and the potential consequences are concerning, not just for those looking to invest in the buy-to-let arena.
George Osborne said: ‘Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy.’
But will the changes indeed ‘choke off’ investment in rented properties (bearing in mind the other changes which mean landlords can no longer offset their mortgage interest against tax on rental income) meaning there are fewer properties to rent on the market for those that cannot afford to buy, leading to increased rents?
Will it mean that there will be a sudden rush by investors to buy properties before the changes come into effect in April 2016 and, after that, undeterred investors will just pass on the costs to tenants by charging higher rents? And will some investors instead buy cheaper properties exacerbating the position in the market for first time buyers?
In the longer term (post April 2016), perhaps it will come as good news for some first time buyers, especially coupled with the London Help to Buy scheme which will offer interest-free loans worth up to 40% of the value of a newly built home. However, the changes do not seem to be a clear victory for first time buyers and those who cannot afford to buy a home.
Buy-to-let landlords and people buying second homes will soon have to pay more in stamp duty, the chancellor has announced.
From April 2016, those in England and Wales will have to pay a 3% surcharge on each stamp duty band.
George Osborne said the new surcharge would raise £1bn extra for the Treasury by 2021.
Landlords reacted angrily to the change, saying it would “choke off” investment in rented properties.