Budget 2011: Stamp Duty for investors to be reformed
Stamp Duty Land Tax rules for bulk buyers of residential property are to be reformed, George Osborne has revealed in the Budget 2011.
In a boon for landlords, the government aims to boost demand for residential property and promote the supply of private rented housing by reforming Stamp Duty to make investment in residential properties easier.
Investors in multiple property purchases will now be charged Stamp Duty according to the average value of the properties they have bought rather than on the combined value as it currently stands.
The change will be subject to a minimum rate of 1%.
The change will cost the government an estimated £70m in 2011/12 and £150m by 2015/16.
In addition, the government aims to boost the private rented sector over the long term by making Real Estate Investment Trusts easier to set up and more accessible to investors by removing the 2% conversion charge.
David Whittaker, managing director of Mortgages For Business, said the details of the change would dictate whether it was effective: “It’s important to establish whether this new structure will be imposed purely on properties bought in bulk in a single location – such as a block of flats – or if it will include a situation where a landlord buys multiple properties in different locations. It’s a vital distinction, which needs clarification.
“However, the signal is a positive one for the rental sector at an extremely crucial time and we’re pleased the government is beginning to take this section of the housing market seriously.”
The Chancellor also revealed he will clamp down on the abuse of Stamp Duty rules by owners of high value properties, generating around an extra £30m for the Treasury in 2011/12 rising to £50m by 2015.
Stamp Duty for properties worth more than £1m will rise to 5% from 6 April 2011.
However, in the Budget, the Chancellor made no mention of Stamp Duty relief for first-time buyers, which currently exempts buyers from paying the property tax on homes valued up to £250,000 until 24 March 2012.
Instead, the outcome of a governmental review into Stamp Duty relief for first-time buyers will be published in autumn this year.
Stamp Duty Land Tax will generate an estimated £5.8bn for the public coffers this year, rising to £11bn by 2015, according to the Office for Budget Responsibility.