25th November 2015
Buy-to-let landlords and people buying second homes will soon have to pay more in stamp duty, the chancellor has announced. From April 2016, they will have to pay a 3% surcharge on the stamp duty band for the property.
George Osborne said the new surcharge would raise £1bn extra for the Treasury by 2021.
Landlords reacted angrily to the change, saying it would "choke off" investment in rented properties.
Other changes announced by the chancellor included an extended Help to Buy scheme in London, and more money for the Starter Homes programme.
The stamp duty surcharge will lift each band by 3%. That means that for properties worth between £125,000 and £250,000, where the stamp duty is 2%, buy-to-let landlords will pay 5%. For the average buy-to-let purchase of £184,000, that means they will pay an extra £5,520 from April 2016.
Buy-to-let landlords are already due to get a lower rate of tax relief on mortgage payments. Landlords would only receive the basic rate of tax relief - 20% - on mortgage payments, a change being phased in from 2017.
Up to £60m of the money raised from the stamp duty surcharge will go to help home-buyers in England in places where holiday homes have forced up local prices.
The Help to Buy (equity loan) scheme in England will also be extended to 2021, one year longer than planned. An extension to the scheme in London will see buyers who can find a 5% deposit given a loan worth up to 40% of the property. The loan will be interest free for five years.
Elsewhere the existing maximum loan is for 20% of the property's value. In total, the government will put an extra £6.9bn into housing. This includes an extra £2.3bn for the government's starter homes programme, and £4bn given to housing associations and local authorities to build more homes for shared ownership. Another £200m will be used to build homes for rent, which will allow tenants to save for a deposit.
There will also be a pilot scheme to trial the government's Right to Buy programme for housing association tenants. Five housing associations will take part, to help design the final scheme.