A recent study indicates that most landlords remain steady despite new SDLT changes on second homes.
- Concerns over a potential Capital Gains Tax (CGT) increase were more significant for landlords than SDLT changes.
- Only a small fraction of landlords planned to reduce their investments following the Autumn Statement.
- A significant number of landlords intend to maintain or expand their portfolios over the coming year.
- Market reactions suggest landlords view the SDLT hike as manageable in the current climate.
The recent Autumn Statement brought with it a heightened Stamp Duty Land Tax (SDLT) on second home purchases, a development which many expected would significantly impact the buy-to-let market. However, research conducted by Benham and Reeves illustrates a different narrative. The primary concern among landlords before the announcement was a possible increase in Capital Gains Tax (CGT), which caused around 19% of them to pause their investment plans. Though this CGT hike did not materialise, 22% of landlords indicated they would have reconsidered their property portfolios if it had.
With the announcement behind them, 84% of landlords surveyed expressed their intent to continue their buy-to-let activities without alterations to their portfolios in the upcoming year. An additional 4% even plan to expand their holdings, highlighting their confidence in the viability of the market despite the 2% SDLT hike.
While the SDLT increase presents an additional cost burden, half of the landlords planning to expand their portfolios stated they are now reconsidering the extent of their expansion. Conversely, 53% are not deterred and will proceed with their original plans. Importantly, only 11% of those who intended to grow their investments have been put off by the new SDLT rate.
Marc von Grundherr of Benham and Reeves highlighted the relief among landlords due to the absence of a CGT increase. He noted that while the SDLT hike is an unwelcome adjustment, it is a cost that landlords believe can be managed efficiently. Von Grundherr also emphasised the appeal of the UK rental market to both domestic and foreign investors, especially given the reduction from a previous 28% rate, suggesting a relatively favourable investment environment.
The buy-to-let sector maintains its reputation as a solid and dependable investment avenue, particularly when governmental policy changes are navigated with strategic foresight. The additional stamp duty costs are viewed as a short-term challenge that does not drastically alter the sector’s overall attractiveness.
Landlords remain optimistic and largely unaffected by the SDLT change, viewing it as a minor hurdle.
