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Investors Deterred by Buy-to-Let Clampdown

Tuesday, 1st March, 2016

For many people buy-to-let has been an attractive income investment at a time of low saving rates and stock market volatility. But with the Chancellor George Osborne making it his goal to create what he described as a "level playing field" between landlords and those buying homes to live in, many would-be landlords are now put off the idea of investing in property, new reseach shows.

Around one in four would-be landlords have been deterred from the idea of investing in the buy-to-let sector by the Government's proposed 3% stamp duty surcharge, according to the study by online investment platform rplan.co.uk.

The study has also shown that 9% of UK adults have given up on aspirations to own a buy-to-let while 30% are still considering whether to do so.

Some 14% of existing landlords say they will now sell one or more of their properties because of the new rules.

In his Autumn Statement last year, the Chancellor announced that a 3% rise in stamp duty for buyers of second homes and buy-to-let landlords will come into play from April, almost trebling the purchase tax on a typical 275,000 buy-to-let hom from 3,750 to 10,800. This came five months after he slashed the tax relief that landlords can claim on buy-to-let income, from 40-45% currently to 20% for all individuals - to be phased in over a four-year period from April 2017.

The 10% Wear and Tear tax relief for landlords who rent our furnished homes will also be abolished in April, leaving landlords free to only claim for the amount that they have spent.

A change to Capital Gains Tax (CGT) rules also means buy-to-let landlords will, from April 2019, have to pay any CGT due within 30 days of selling a property, rather than waiting until the end of the tax year, as at present.


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