Landlords hit by stamp duty surcharge increase to 5% in Budget

I love all this cobblers about 'the rents will have to rise' , whenever the conditions change - selective licencing costs, S24, CGT etc etc. Well what landlords (including me) have to realise is that there is simply a limit as to what tenants can pay. Yes, you might be able to increase the rent by 10 or 20 a month but in circumstances today increased of 100s of pounds which some landlords are expecting is just not on. All that will happen is tenants will stop paying the rent and you will be stuck with them for a year while you try to get them out. Many of the issues were caused by S24 by overextended landlords. Luckily I managed to sell 12 properties to pay off the other 6 so I am now mortgage free.

When my tenants leave I will sell the property, and I would urge landlords to examine their finances and take a realistic view - if you cant make it pay , make it go away .. and sell

We have been well and truly shafted by the Conservatives with Labour hammering the final nail into the coffin.

Also buried on page 87 and not mentioned is that the 0% upto £250k will go back to 2% from £125k from April 2025.

https://assets.publishing.service.gov.uk/media/6721d2c54da1c0d41942a8d2/Policy_Costing_Document_-_Autumn_Budget_2024.pdf

I sold one of my rental flats earlier this year for £120k to another landlord as I wanted my excellent long term tenants to stay in situ. Stamp duty was £3,600 and the buyer was balking at handing such an amount over to the Chancellor. I got the place sold by the skin of my teeth. There’s no way the buyer would have been willing to pay SDLT of £6,000. So landlords exiting are going to have an even more difficult time selling to another landlord now. Which means kicking tenant out and selling with vacant possession. Well done Labour.
They’ve also crippled business with huge increases to NIS and Minimum Wage. Result = job losses. Well done again Labour.

Reply to the comment left by Dylan Morris at 31/10/2024 - 08:44
Agreed or if the extra stamp duty is factored in then than can only mean rent rates will increase to maintain a sensible ROI.

Reply to the comment left by SimonP at 31/10/2024 - 04:00"SDLT is not a charge against income, therefore LL's profits will not be affected. It is considered to be a cost of acquiring property amd therefore can generally only be deducted when calculating capital gains (or losses) for CGT purposes."
That is like Labour party maths! A bit like "we aren't taking anything more from employees" (only the pot that pays them).
One question Simon: How do people finance this extra charge? Answer: - With borrowings that incur a regular interest charge. (A P&L line)
Even if you are an entirely cash landlord as I am, you would still have opportunity cost foregone to factor in, ie the income I would have foregone on my other investments I would have had to pull money from.
You can't just take more in taxes and think that it doesn't affect anything.

Reply to the comment left by SimonP at 31/10/2024 - 04:00"SDLT is not a charge against income, therefore LL's profits will not be affected. It is considered to be a cost of acquiring property amd therefore can generally only be deducted when calculating capital gains (or losses) for CGT purposes."
Simon are you a landlord? If so, I am surprised and you really need to think this one through more carefully. I''ll help. Where does the money come from to pay the extra 2%?
Answer, from borrowings which incur annual interest, or from other investments which should have been earning income, so, either way it will be a real p&l hit.

It’s not just landlords affected but developers too. Looking to buy a run down property that nobody else wants to buy as way too much work, to do a full refurb and sell on. That’s an extra 2% please. (Of course it could also be a landlord doing this bringing derelict properties to the rent market).

Just been on the radio that people are pulling out of property sales / buys already due to the extra 2% - will only affect people who have an overlap between selling and buying their next property, but would seem that this is quite common.

Reply to the comment left by JamesB at 31/10/2024 - 09:57James, I am a landlord and fully understand where Simon is coming from. I think the reality is that few landlords will be buying in the foreseeable future. Those of us remaining in the game will be battening down the hatches, maybe reducing or even selling off our portfolios. I'm certainly not buying so SDLT doesn't impact my business at all - it was paid years ago. The only consideration for me is when I sell, my costs of acquisition, which include my original SDLT, are deductible against my CGT bill ... which is the point that Simon alludes to.

Reply to the comment left by Grumpy Doug at 31/10/2024 - 12:51
I thought Simon was saying that the extra stamp duty was basically irrelevant to landlords' profits when buying another place as it would only figure in an eventual capital gains calculation at the end, rather than rental profit for tax calculation. That was how I read it. I then annoyingly posted basically the same thing twice as my comments simply disappeared!

Obviously stamp duty changes for purchases have little impact on a portfolio that is already owned. I say "little" rather than "no" impact because you only have to spend 5 minutes on the various property forums today to see how many purchasers are saying they will be trying to negotiate lower prices as a result - an obvious response. In fact it could possibly be that places that appeal mainly to investors took pretty much a 2% hit in value yesterday.