Campaigns Finance and Taxation Reform

Call for tax rethink after stamp duty windfall

letting agent fees
Sally Walmsley
Written by Sally Walmsley

The Government is being urged to rethink punitive PRS tax changes after it was revealed the new stamp duty surcharge raised more than a billion pounds in its first nine months.

It had been predicted the 3% surcharge on the purchase of additional homes, which was introduced in April last year, would bring in an additional £630 million in the first year.

However figures published today by HMRC show that in just nine months the tax had already raised £1.19bn, a massive £560 million more than forecast for the whole year.

If this rate continues, revenue for the year will exceed £1.58 billion, nearly £1 billion more than projected.

In November the Office for Budget Responsibility predicted that in its first four years the extra levy would bring in £3.1 billion more than forecast.

The RLA is now calling on the Government to use this extra revenue from the stamp duty changes to scrap planned reforms to mortgage interest relief, which will, in turn, prevent landlords selling up or having to increase rents.

One RLA survey has found that 58% of landlords are considering reducing investment in their rental properties because of the changes. And 66% feel the tax changes will place upwards pressure on market rents.

At the very least, the RLA believes the Government should pause the start of the introduction, from April, of the mortgage interest changes to enable a better assessment to be undertaken of the likely impact of the policy.

RLA Policy Director, David Smith, said: “In raising nearly twice as much in just nine months as the tax was predicted to make in one year this stamp duty windfall gives the Government a chance to back the rental market and support the development of new homes which we desperately need.

“At no stage has evidence been published to support the assertion that landlords are taxed more favourably than homeowners, or that they are squeezing first time buyers out of the market.

“Assessments by the Institute for Fiscal Studies and the London Schools of Economics contradict the Treasury’s position completely.

“It is also nonsense for HMRC to suggest that one in five landlords will be affected by the mortgage interest changes, when what matters is the number of properties affected.

“The Government has received far more money than it  expected. We urge them to use this to support the country’s tenants and undertake a fuller impact assessment of a policy that has the potential to cause untold damage to the rental market.”

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Communications Manager for the RLA and award-winning Editor of RPI magazine. With 16 years’ experience writing for regional and national newspapers and magazines she is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and editorial content for our media partners.

She issues press releases promoting the work of the RLA and its policies and campaigns to the regional and national media and works alongside the marketing team on the association’s social media channels to build support for the RLA and its work.

4 Comments

  • Sadly I can’t help but think that those responsible will be thinking something completely different – that they’ve underestimated the size of the problem and so obviously they need to “make it hurt” even more.
    That they’ve managed to raise tax like this, while at the same time getting those who will ultimately pay the bill to thank them for it, just proves that we’re easy targets and can’t expect any sympathy. As has happened so far, I think any protest will be met with a “beatings will continue until moral improves” response.

  • In my view, the whole point of raising stamp duty was to target landlords as a source of easy revenue to help the ailing economy. The fact that the new Stamp duty charge raised more than anticipated will have the opposite effect expressed in this article. It will encourage government to continue and, probably, add more.

  • The figures show the majority of BTL/second home purchases are by cash buyers. Isn’t that the major point for s.24? That it will penalise the wrong (mortgaged) sector of the market, while cash/rich buyers – not first time buyers – will capitalise further.

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