Following the Budget announcement on 30 October, NAVA Propertymark, Propertymark’s auctioneering arm, has expressed concerns about the 2% increase in Stamp Duty rates for second homes.
The rate rose from 3% to 5% from 31 October 2024.
Propertymark believes this could force investors to leave the private rental sector (PRS), reducing the supply of rental homes and causing rent increases.
The trade body has advocated for targeted tax relief to counteract this, suggesting that the 3% surcharge should be reconsidered, as it discourages potential rental property investors and worsens the housing supply shortage.Â
Additionally, Capital Gains Tax (CGT) rates have been adjusted, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%.
Stuart Collar-Brown, NAVA Propertymark president, said: “Following Wednesday’s Budget announcement on the increase in SDLT on second homes and rental properties from 3% to 5%, coupled with many local authorities doubling council tax on second homes, there is little doubt that this will have an impact on investors and likely lead to them exiting the market, perhaps quicker than they had intended to with less homes to rent leading to increases in rents across the board.
“Much of the pre-Budget chatter was surrounding Capital Gains Tax increases but fortunately the rates for residential properties have remained unchanged at 18% (basic) and 24% (higher rate).
“This will be a relief for investors but those with non-residential assets in their portfolios will see an impact to their long-term gains with these rates increasing to be aligned with residential properties.”
Collar-Brown added: “The Budget will no doubt have mixed reactions, with some celebrating the unchanged CGT rates for residential properties but the increase in SDLT will surely have a negative effect on private rental sector stock levels and thus possibly increase rent due to further lack of availability.”
