Student landlords hit by stamp duty hike for investment properties

The Chancellor Rachel Reeves' Budget has hit landlords in the private rented sector (PRS) with the Stamp Duty Land Tax (SDLT) surcharge on additional homes rising from 3% to 5%. 

The new rate is effective from tomorrow and critics say the move could significantly impact the UK's PRS. 

This increase in SDLT will directly affect the profitability of student landlords - and make investment in new properties less attractive. 

'A serious blow to landlords' 

The managing director of Accommodation for Students, Simon Thompson, said: "This stamp duty rise is a serious blow to landlords in the private rented sector. 

"It will undoubtedly discourage investment and reduce the supply of much-needed student accommodation.  

"As a result, students may face higher rents and fewer choices when it comes to finding a place to live." 

Mr Thompson also emphasised the importance of a healthy rental market for students and said: "Student landlords play a vital role in providing safe and affordable housing for students. 

"By making it harder for them to operate and invest, we risk creating a housing crisis for the next generation of student tenants." 

Higher rate of Capital Gains Tax 

Pre-Budget fears that landlords selling rented homes would have to pay a much higher rate of Capital Gains Tax (CGT) have failed to materialise. 

There was concern that the higher rate of CGT would rise to 40% – up from 24% currently. 

The Chancellor announced that the lower rate of CGT will increase to 18% from 10% to 18%, while the higher rate will be 24% - up from 20%. 

However, student landlords will see the rates on residential property remaining at 18% and 24%. 

'Continue to see a growing disparity' 

The ARLA Propertymark president, Angharad Truman, said: "We continue to see a growing disparity in the number of private rented homes available against a backdrop of increasing demand from tenants.  

"Therefore, it is disappointing to see that the UK Government did not address this fundamental issue in its Autumn Budget and instead has announced yet another blow for landlords by increasing Stamp Duty on second homes. 

“The private rented sector plays a crucial role in housing the nation with over 4.6 million homes in England alone, therefore it is imperative that the UK Government does not continue to push landlords out of the market. 

"In order to ultimately keep people in much needed and affordable private rented homes, we continue to stress the importance of support for the private rented sector including incentives for landlords to invest rather than continuing to penalise them through regulatory bombardment and increasing costs." 

Other reaction to the Autumn Budget from the property sector: 

• Emma Cox, the managing director of Real Estate at Shawbrook, said: "The Government should of course prioritise the needs of renters and buyers, but landlords will feel like they are once again bearing the brunt of punitive measures with a further increase in the stamp duty surcharge on additional homes coming into effect from tomorrow. 

"Demand still far outweighs the supply of quality homes, and tackling this will be extremely difficult if landlords are disincentivised by government measures." 

She added that the bank's research shows that landlords have confidence in the market, with a third planning to add to their portfolios in the next 12 months. 

• Lucian Cook, the head of residential research at Savills, said: "Any relief buy to let landlords, and second homeowners may have felt from seeing their exposure to Capital Gains Tax unchanged will have been very short-lived given an increase in the SDLT surcharge. 

"The risk is that it further constrains the supply of private rented accommodation, keeping upward pressure on rents.  

"New buy-to-let investors will be very thin on the ground, and even existing larger, wealthier, landlords, will think very carefully about whether they continue investing." 

• Jon Cooper, the director of mortgages at Aldermore, said: "The choice to increase additional Stamp Duty on second homes from 3% to 5% will have an impact on our housing ecosystem.  

"By placing increased pressures on landlords, there will also be increasing costs for renters, not least because we anticipate many landlords might withdraw from the market in response."