A new study into how the additional 3% Stamp Duty Land Tax, which is due to come into force from this Friday, will financially impact landlords has been released by LendInvest.
The research revealed that 13% of landlords in England will pay stamp duty for the first time. House prices in 14 out of 105 postcode areas average at £125,000 or under, meaning future BTL purchases will be subject to up to £3,750 SDLT.
Lendinvest found that Darlington, Halifax and Doncaster are among the worst affected by first-time SDLT payment, due to the fact they contain the most properties subject to SDLT for first time and the lowest average rents.
86% of those paying stamp duty for the first time will be in the Northeast or Northwest - 12 out of 14 postcode areas with average house prices under £125,000 are in these regions.
However Outer London landlords will see the largest overall rise in SDLT due. Tunbridge Wells, Dartford and Romford will see SDLT rise more than 300%, compared to 200% in Inner London.
London & Southeast landlords will also need the longest to repay higher SDLT - the equivalent of 20 months’ rent.
Christian Faes, Co-Founder & CEO of LendInvest, said: ”The stamp duty hike spells bad news for landlords - and their tenants. Put simply: when taxes rise, someone has to pay. Our latest BTL Index shows that the likely payer is ultimately going to be the tenant, with higher rents. The Stamp Duty Land Tax hike will cause rental yields to fall for landlords, putting pressure on them to raise the rents they charge.
It’s not just in Inner London, where landlords’ taxes will soar, that we can expect to see landlords and tenants squeezed financially. The Index shows that all across England and Wales, we will many landlords factoring several thousands of pounds of stamp duty tax into their budgets for the first time. Towns like Sunderland, Blackburn, Wigan and Oldham could be particularly badly impacted: here, rental yields are comparatively good but average house prices are below £125,000 meaning SDLT will be imposed for the first time.
The Treasury’s decision to inflict this tax hike is part of their longer term plan to professionalise the buy-to-let market and make Britain a country of homeowners. While the mission has its merits, there are no quick fixes to the nationwide housing crisis. Until there are more houses on the streets that people can buy at reasonable prices, landlords have their place and their tenants must be protected.”