Majority of landlords undeterred by Autumn Statement SDLT hike, research reveals

While the threat of a Capital Gains Tax (CGT) hike raised concerns for landlords in the lead up to last week’s Autumn Statement, the increase in Stamp Duty Land Tax (SDLT) on second home purchases is less of a concern, according to research by Benham and Reeves.

A survey of landlords across England found that around one in five landlords (19%) had put their buy-to-let investment plans on hold in the run up to the Autumn Statement, with the threat of a CGT increase being the reason for this hesitation.

22% of those surveyed stated that, had the Government chosen to increase CGT on residential property investment, they would have reduced the size of their portfolio.

In fact, of the 22%, 10% stated they would have exited the sector altogether.

Nevertheless, following the statement 84% of landlords said they planned to remain within the buy-to-let sector without making changes to their investment portfolio over the next 12 months, while a further 4% expected to increase their portfolio size and just 12% planned to reduce it.

However, while landlords were not hit with a CGT hike, they have seen an immediate 2% increase in the SDLT owed on second home purchases.

Of those landlords who stated they will now look to increase their portfolio, around half (47%) said they will not expand it as much as previously planned due to the second home SDLT hike, whilst 53% will press on undeterred.

Of the majority who planned to maintain their portfolio size, just 11% said that they had planned to increase it but have been deterred by a second home SDLT hike.

Marc von Grundherr, director of Benham and Reeves, said: “It’s clear that whispers of a Capital Gains Tax hike in last week’s Autumn Statement were a considerable concern for around one in five landlords and, had they come to fruition, we could have seen a worsening of the current rental crisis as more landlords chose to call time on their buy-to-let investment.

“The fact it didn’t materialise has been well received, not just by domestic landlords, but also foreign investors, who are more than happy to pay as it only applies to the net profit they generate.

“When you also consider that this rate has actually been reduced from the previous rate of 28%, many actually view themselves as better off in the current market.”

He added: “However, it’s clear that whilst they didn’t escape completely unscathed, a 2% hike in second home Stamp Duty costs is a slightly bitter but manageable pill to swallow.

“The buy-to-let sector remains one of the safest and most consistent avenues of investment despite the Government’s best efforts and the vast majority of landlords continue to recognise this.

“The additional upfront cost now required by way of stamp duty is one that can be mitigated within a very short time period and so we don’t believe it will have much of a detrimental impact on the rental sector.”

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