Howce Estate Agents Bristol & Bath Expresses Concern About The 3% Extra Stamp Duty For Buy-to-Let Investors

Howce Estate Agents in Bath, UK has expressed concern regarding the extra stamp duty to be imposed for buy-to-let investors and second home buyers. They will have to pay an extra 3% stamp duty starting April 2016, as announced by Chancellor George Osborne in his autumn statement. This means that the stamp duty bill for a property worth 275,000 GBP will skyrocket from the current 3,750 GBP to 12,000 GBP. This is a substantial additional burden for a property investor.

The move is supposed to help finance new homes for first-time buyers and to make it easier for them to purchase a property. However, Atif Javid, Managing Director for Howce Estate Agents Bath & Bristol, is concerned that the increase in stamp duty could have the opposite effect. He believes that the increased stamp duty could actually make it more difficult for first time buyers to obtain a property for two specific reasons.

“My first concern is that the rents could rise due to landlords looking to offset their additional stamp duty bill,” says Atif Javid. “Higher rents will make it more difficult for potential home buyers, who are currently renting, to save the deposit funds to buy a home. Many potential first-time buyers will therefore struggle to get onto the property ladder.”

The second concern of Howce Estate Agents Bristol & Bath is that, as property investors are a key source of funding for new housing developments, they will be discouraged from investing further. New-build properties are heavily dependent on off-plan investors for development finance. A reduction in demand from investors will dramatically decrease the viability of many new-build schemes. Therefore, the supply of new properties will decline. Investors who fund new developments will be put off by the tax hike and may not buy into new-build projects. This, in turn, could also mean that house prices would continue to rise due to the reduced supply.

For the short-term, Howce Estate Agents believes that there is likely to be a rush of buy-to-let investors pushing through property deals before the tax increase comes into force in April 2016. “While this is good news for the housing market for the next six months, it is not clear what the overall, long term effect will be,” explains Atif Javid.