Government ponders changes to the stamp duty
The Treasury is reportedly considering ways to encourage more investment in the private buy-to-let sector on the part of large, professional landlords. One of the options currently being studied by the Treasury is reforming the stamp duty, so that those who purchase residential properties in bulk are no longer penalized for making a much larger investment than a landlord who simply buys a single house or flat. The government increasingly realizes that buy-to-let investors play an ever more important role in addressing the country’s housing needs and they now account for 20 percent of buyers of all newly built properties.
The London Times calculated that if the stamp duty were changed so that it would apply to each individual property, rather than a bulk transaction, landlords and buy-to-let investors would stand to save tens of thousands of pounds. Many of the properties purchased in bulk by buy-to-let investors are valued at less than £250,000 per unit and a change in the stamp duty would mean that they would only have to pay a 1 percent tax on each. The problem is that when the stamp duty is applied to bulk transactions, landlords and investors end up paying 4 percent, provided that the total value of the sale exceeds £500,000. The Times reported that if an investor were to buy 100 newly built properties at £150,000 each, he/she would pay £150,000 in stamp duties, rather than the current rate of £600,000 on this major bulk purchase.