Stamp duty reforms won’t deter investors as charges will be negated by capital growth within a year
The proposed reform to stamp duty for second homes likely wont deter prospective investors judging by the analysis weve recently produced. Despite the rush of investors looking to capitalise ahead of the deadline on the 1st of April, our research shows that the majority of investors will see that property price inflation, within a year or less, will more than compensate them for their entire stamp duty bill even with the 3% surcharge. Its likely that the biggest losers of the stamp duty reform will actually be tenants as landlords pass on their additional costs to rental prices. The table below shows how buy-to-let purchasers in eight of the ten regions will find that capital gains within a year of purchase will negate all stamp duty costs should properties continue to grow at their current rate. The only regions where predicted capital gains on an average priced home do not eclipse stamp duty costs, are the North East and North West of the UK. The government, through its new stamp duty surcharge, is trying to make the playing field more even between property investors and first-time buyers by eating into landlords profits. From a landlords perspective it appears as though UK institutions are out to get them. Rather than this continued assault against landlords however, it would be better to address the shortage of stock in the UK through a long-term plan for the UK property market which looks beyond the next parliamentary period. The unintended long term consequence of numerous policies seeking to deter buy-to-let landlords is that this investment option becomes unattractive, as uncertainty dogs the market, leaving this country of a shortage of rental stock.