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The British Government is not likely to remove the extra 3 per cent stamp duty surcharge on additional homes.
An official response to a petition calling for the reintroduction of full mortgage interest relief and the removal of the extra stamp duty stated that that government had no plans to defer from current strategy. The British Government stated that change is unnecessary, and that it will continue to aim to level the field between landlords and first time buyers.
Organisations such as the Residential Landlords Association (RLA) have expressed concerns about the increasingly punitive tax measures, arguing that they could restrict housing due to increased financial restrictions on landlords. The RLA is supporting an online petition that has attracted more than 14,000 signatures, meaning that the Government issues a response. If the petition reaches 100,000 by November it should be debated in Parliament.
However, the official response does not seem swayed: ‘By restricting landlord’s finance cost relief to the basic rate of income tax we are helping to reduce the advantage landlords may have over homeowners in the property market. Income tax relief for finance costs is not available to ordinary home buyers. It is also not available to those investing in other assets, such as shares, so we’re helping to reduce the distortion between property investment and investment in other assets.’
The response continued: ‘Previously, landlords could get relief on their finance costs at their marginal rate of income tax. By restricting finance cost relief to the basic rate, all individual landlords will receive the same rate of income tax relief on their finance costs. Landlords can still claim income tax relief at their marginal rate of tax on day to day running costs incurred in letting out a property, such as letting agent fees and replacing furniture.’
It also argues that the taxes won’t negatively affect the housing market: ‘Given that only a small proportion of the housing market is affected by this change, the government does not expect it to have a large impact on either house prices or rent levels. The Office for Budget Responsibility (OBR) also expect the impact on the housing market will be small.’