The Intermediary – February 2025 - Flipbook - Page 35
people the Government claims to be helping.
While Ministers may have painted this move
as a victory for first-time buyers, the reality is
far murkier.
As Mendes points out: “Additional costs may
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of
be passed on to tenants through higher rents,
particularly in areas where rental supply is
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already constrained.”
Fewer landlords willing to expand their
MAR
MARYLEN EDWARDS,
portfolios means fewer homes available to
tenants in the UK's busy rental market – some
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of whom have ability to or interest in purchasing
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– and when demand outstrips supply, rents
inevitably rise. This leaves tenants caught in a
vicious cycle – struggling to save for a deposit
while their rental costs spiral.
The Government argues that the surcharge
The property market presents
both
increase will free up housing stock and generate
opportunities and challenges for aspiring landlords. While
£1.2bn in tax revenue by 2029. But as Short
property investors face additional Stamp Duty costs through the
highlights, this policy risks impacting landlords'
5% surcharge on investment properties, careful timing and market
willingness to buy more properties, because
research can still make property investment financially viable.
the acquisition cost will increase, which means
Potential savings can be substantial for those who thoroughly
“profitability will be hampered.”
Those who do continue to invest will have little
understand the tax implications and market conditions.
Amid fluctuating rates and uncertain economic conditions,
choice but to raise rents to offset the extra costs,
first-time landlords must look beyond quick savings. Critical
further squeezing tenants.
factors like rental yields, property appreciation, and local market
And those who sell up? Their absence from the
market will only deepen the rental housing crisis.
Calls for reform
As the deadline for the new Stamp Duty
threshold quickly approaches, and landlords
trends carry equal weight in making sound investment decisions.
While the Stamp Duty relief offers an attractive upfront
financial incentive, buying a property remains a complex decision
requiring careful consideration of multiple factors beyond
immediate tax benefits.
This deadline represents more than a simple tax-saving
are already feeling the squeeze of the increased
opportunity – it's a pivotal moment for those seeking to diversify
second home surcharge, the Government’s
investment portfolios and establish a long-term financial strategy
approach to the housing market is starting to
through property ownership. The key lies not merely in beating
look less like a balancing act and more like a
the rush, but in making well-informed investments that align with
slow-motion runaway train.
long-term financial goals.
Rather than supporting first-time buyers, it
As the deadline approaches, potential landlords must proceed
has chosen to reduce the very Stamp Duty relief
thoughtfully and with caution, weighing the appeal of tax savings
designed to help them, forcing many to find
against the complexities of property investment, combining
thousands more just to get on the ladder.
careful analysis with realistic expectations and a comprehensive
At the same time, landlords face yet another
understanding of broader market dynamics.
tax hike, squeezing the private rental sector at a
time when demand for affordable housing has
never been higher.
Buyers, renters, and investors alike are being
hit from all sides, with affordability stretched to
breaking point. However, beyond Government
mishandling, Stinton argues that Stamp Duty
itself is the real issue.
He says: "Stamp Duty has been long in need of
reform. It’s outdated, expensive, and can be a real
barrier to homeownership."
Instead of addressing its flaws, the Government
prices to avoid unfairly penalising buyers in
high-cost areas, for example, or introducing fluid
thresholds that rise with inflation.
While lower or abolished Stamp Duty means
a loss in tax for the Government, the wider
ecosystem of stimulated transactions – with
all this entails for ancillary businesses and the
economy – means it is not a simple negative.
No matter what the outcome, as Stinton notes:
“The reality is, home buyers are already facing
has doubled down on a system that makes buying,
challenges with higher interest rates and an
selling, and investing more difficult.
under-supply of housing.
Stinton suggests a more pragmatic approach
– linking Stamp Duty bands to regional house
“Hiking Stamp Duty at a time like this feels like
another barrier rather than a solution.”
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February 2025 | The Intermediary
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