Landlords would be exempt from Chancellor Rachel Reeves’ plans for a national property tax but could ultimately pay higher prices for homes, leading to fewer rental properties, it is claimed.
The Treasury (main image) is reportedly looking at a radical overhaul of Stamp Duty and council tax in England and Northern Ireland, which sources said was based on the findings of a report from thinktank Onward called A Fairer Property Tax.
This suggests that sellers of properties worth more than £500,000 would pay an annual tax of 0.54% while sellers of properties worth over £1 million would pay an annual tax of 0.81%.
But it would not replace Stamp Duty on second homes which sees landlords buying properties pay a surcharge of 5% on the portion of a property’s value up to £125,000 and 7% on anything between £125,001 and £250,000. It is thought these rules would remain the same.
It’s not yet clear how owners of second properties would be affected if they were buying and selling properties at the same time, according to Simply Business, for example, whether they would be expected to pay stamp duty on the property they’re buying and a national property tax on the property they’re selling.
It suggests that if the proposed changes were introduced, there could be a rush to sell properties worth over £500,000, providing opportunities for landlords looking to buy larger properties.
However, if stamp duty was replaced, over time sellers of these homes could inflate values to cover the extra tax. This would increase prices for landlords, who would also be required to pay the stamp duty surcharge - then fewer landlords might buy properties, leading to a shortage of rental properties and higher average rents.
Meanwhile, a petition started by Andrews Property Group and backed by Rightmove calling for flexible stamp duty payment options has now reached 2,609 signatures. It proposes allowing home buyers to spread stamp duty costs over two to five years rather than finding the full amount within 14 days of completion.
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