Despite recent policy changes, landlords are showing resilience.
- Many landlords were initially worried about potential Capital Gains Tax increases.
- However, a survey reveals the impact was less severe than expected.
- Most landlords intend to maintain or expand their property portfolios.
- The SDLT increase on second homes is viewed as manageable.
A survey conducted by Benham and Reeves highlights a noticeable resilience among landlords despite recent tax policy changes announced in the Autumn Statement. While the initial threat of a Capital Gains Tax (CGT) hike caused a degree of apprehension, the reality proved less daunting than anticipated for many.
Approximately 19% of landlords considered halting their buy-to-let investment plans due to the potential CGT increase. Among them, 22% expressed that an actual hike would have compelled them to shrink their portfolios, with 10% even contemplating exiting the sector entirely. These figures underscore the gravity of the CGT threat, which fortunately did not materialise.
Despite the concerns preceding the statement, 84% of landlords have elected to continue their involvement in the buy-to-let sector over the next year without altering their existing investment strategies. Moreover, a small yet significant 4% are planning to expand their portfolios, undeterred by policy changes, although 12% have opted for a slight reduction.
The Autumn Statement did bring about an immediate 2% increase in the Stamp Duty Land Tax (SDLT) on second home acquisitions. Of the landlords who are contemplating portfolio expansion, nearly half have reassessed the scale of their intended growth due to this hike. Nevertheless, 53% are determined to proceed with their original expansion plans.
Marc von Grundherr of Benham and Reeves commented on the situation, noting the profound concern induced by the potential CGT hike. He emphasised that a tax increase might have exacerbated the existing rental market challenges. The absence of such an increase has been positively received, particularly by foreign investors who find the current conditions favourable. The SDLT rise is perceived as an additional cost that, while slightly unwelcome, does not pose a significant threat to the sector’s allure.
Landlords and investors recognise that the buy-to-let market, despite government interventions, continues to offer stable and consistent returns. The additional SDLT cost is seen as a short-term hurdle that is manageable, ensuring that the sector remains an attractive investment avenue.
The resolve of landlords in navigating recent tax changes underscores the sector’s enduring appeal and strength.
