Time is running out for those buying a second property to avoid increases in stamp duty, Swindon-based Tenant Screening has warned.
On April 1, planned changes to Stamp Duty Land Tax on second homes and buy-to-let properties are due to come into force making it more expensive to invest in more than one property. Chancellor George Osborne is expected to confirm this change in Wednesday’s Budget.
Tenant Screening, which provides a vetting service to landlords and letting agents across the country, says the move may put people off property investment, with repercussions on the rental market.
Currently, house-buyers pay stamp duty on anything over £125,000. From 1 April, this is set to increase by 3 per cent on top of current rates, for purchases of additional residential properties, such as buy-to-let properties and second homes.
“There is a starting threshold of £40,000 for the new rate, which will capture nearly all buy-to-let transactions,” said Kelvin McCarthy, Screening Manager at Tenant Screening. “If people are currently in the process of buying a second home or buy-to-let property they would be advised to complete the transaction before April 1.”
The stamp duty increase isn’t the only thing to hit landlords. From April next year, new rules will be phased in that will remove the right to claim tax relief on mortgage interest, and the system to replace it is likely to result in more landlords, who normally pay basic-rate taxes, falling into a higher tax bracket.
Kelvin said: “These two factors are bound to have an impact on the property rental market. We haven’t seen it yet, but we will do and, with property prices increasing all the time, there may be a double whammy of a shortage of affordable housing and also of rental properties.”
Tenant Screening offers landlords and letting agents across the UK a screening service for potential tenants. Kelvin and his team can make a number of checks on would-be tenants ranging from credit checks, residency and ID verification, to employment and landlord referencing, as well as identifying court or insolvency information held against the prospective tenant.
For more information visit www.tenantscreening.co.uk or phone 0845 5650275.
Pictured above: Kelvin McCarthy