From 1 April 2016 people purchasing additional properties such as buy to let properties and second homes will pay an extra 3% in stamp duty.
This means that tax bill on a buy-to-let property costing £250,000 will jump from £2,500 to £8,800.
This is the second major blow to buy-to-let investors this year, after the summer Budget in July reduced landlords’ ability to offset mortgage interest costs against rental income. That change will be phased in between 2017 and 2020 and is will dramatically reduce the yields available on investment properties and may even make some existing buy-to-lets unprofitable.
This may of course trigger a wave of landlords looking to offload their properties, which may in turn make more first time buyer properties available. Any increase in property supply stops prices from soaring.
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