Stamp duty changes imposed on property investments are raising double the amount of money from buy to let investors and home-buyers than initially expected.
New analysis from Blick Rothenberg has revealed that the Treasury has earned nearly £2 billion since the introduction of the 3 per cent stamp duty surcharge. It was initially estimated that the changes would earn half this much, at just £1 billion per year throughout the years between 2016 and 2020.
The controversial policy, which has been dubbed ‘the landlord tax’ by critics, states that anyone purchasing a buy to let investment property or second home must pay an extra 3 per cent in stamp duty charges. This is on top of general stamp duty. The change was introduced in April 2016.
Whilst there was initial concern about the measures dampening the buy to let sector, the figures currently suggest that the policy has not prevented landlords and investors from purchasing properties.
In order to calculate the £2 billion figure Blick Rothenberg compared HMRC data from the year ending July 2017 to the year ending in July 2015. Throughout these two periods, a near enough identical number of residential properties were purchased.
In the year to July 2017 £12.4 billion was taken in stamp duty, up £2 billion from the year ending July 2015. Some of this difference can be attributed to rising house prices, however it is likely that the majority of the increase has arisen from the surcharge.
Director at Blick Rothenberg, Robert Pullen, explained: ‘The Government will need to urgently consider whether the additional 3 per cent stamp duty policy is helping achieve fairness in the property market, or if it is creating more problems than it is solving. The policy intention was always stated to be to realign the residential property market to make it fairer for first time buyers. It is becoming clearer, however, that as prices continue to rise the measure has succeeded only in generating extra tax for HMRC as well as a sluggish property market evidenced by the number of property transactions falling.’