Since the chancellor of the exchequer’s Autumn budget in which he declared the stamp duty holiday would remain in place until March 2025, a polarising debate has emerged surrounding whether the tax should be doubled for landlords. However, there are concerns this could spell disaster if landlords are discouraged from buying property and providing rental stock when demand is at record levels. In light of this, stamp duty expert and Group Chairman of Cornerstone Tax, David Hannah, analyses how this suggested change would affect first-time buyers, those in the rental market and the wider UK economy as a whole.

The current number of affordable homes in Britain is chronically undersupplied. Figures from the National Housing Federation show that 340,000 new homes need to be built annually to meet the current demand. Buyers and renters have subsequently become locked in bidding wars as demand has outstripped supply – according to the Land Registry the average house price in the UK is £294,329 which is 9.8% higher than the previous year. The Joseph Rowntree foundation is calling for the stamp duty surcharge to be doubled for landlords in an attempt to stop them from snapping up houses and denying would-be buyers the chance to get on the property ladder.

However, due to prices being at record levels,there is a generation of people that cannot afford to buy a home or prefer to have the flexibility of renting. The result of increasing landlord stamp duty tax from 3 to 6% would mean that the increase in costs would fall on renter’s shoulders and contribute further to the mass exodus of landlords from the buy-to-let market at a time when stock is low and demand is high. Serving as testament to this, the average rent in the UK now stands at £1,172 PCM.

David Hannah, Group Chairman of Cornerstone Tax provides some expert insight:

“What people need to remember is that the market saw a positive increase in sales once the stamp duty holiday was introduced, which meant more people could get onto the housing ladder. However, since the economy has significantly dropped – people’s financial situations have changed and many are unable to afford the higher rates of interest on their mortgages. As a result, people are now heavily relying on landlords for rental properties at a time when the market is chronically undersupplied. I think doubling the surcharge on stamp duty to discourage landlords from buying property now would be a disaster and fuel the mass exodus of landlords from the market even further.

“Stamp duty tax is unfortunately an area that is overlooked or misunderstood – our data even found that almost 1-in-7 homeowners feel they paid too much stamp duty in error, with a further 61% admitting they have never stopped to consider whether their payment was in fact correct. Commercial developers and smaller-scale landlords are hugely important in the market currently in terms of providing stock amidst a severe shortage, so it’s of the utmost importance they are not overpaying alongside prospective residential buyers.”