14:15 PM, 30th October 2024, About 2 months ago 10
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As the government raises the Stamp Duty Land Tax (SDLT) surcharge for small landlords to a staggering 5%, the system has become blatantly skewed in favour of corporate investors who pay drastically less. With corporate landlords able to purchase multiple properties under non-residential SDLT rates, they’re paying a fraction of the SDLT that small landlords are forced to hand over. This disparity isn’t just unfair—it’s an intentional move that drives small landlords out of the market while filling the pockets of large-scale investors.
To truly understand the disparity, let’s compare two scenarios where both the small and corporate landlord invest £2,000,000. The only difference? The small landlord is buying five properties while the corporate landlord buys a single block of six flats.
The small landlord, purchasing five properties for a total of £2,000,000, faces residential SDLT rates plus the new 5% surcharge.
Total Standard SDLT (Before Surcharge): £151,250
Total SDLT for the Small Landlord:
£151,250 + £100,000 = £251,250
The corporate landlord, on the other hand, benefits from non-residential SDLT rates simply by purchasing six properties as a single transaction. Here’s the breakdown:
Total SDLT for the Corporate Landlord:
£2,000 + £87,500 = £89,500
| Scenario | Number of Properties | Total Value of Purchase | Total SDLT Payable |
|---|---|---|---|
| Small Landlord (5 homes) | 5 | £2,000,000 | £251,250 |
| Corporate Landlord (6 flats) | 6 | £2,000,000 | £89,500 |
Despite investing the same £2,000,000, the small landlord is forced to pay £251,250 in SDLT—nearly three times more than the corporate landlord, who pays just £89,500. This difference of £161,750 highlights how the SDLT system is rigged in favour of large-scale investors at the expense of small landlords.
The inequality only grows as corporate landlords scale up their investments. Imagine a scenario where a corporate landlord purchases 10 blocks of flats, each worth £2,000,000, while 10 individual small landlords each buy properties worth £2,000,000.
Each small landlord, buying properties worth £2,000,000, would face the same SDLT bill of £251,250.
The corporate landlord, buying all properties in a single transaction for £20,000,000, benefits from non-residential SDLT rates:
Total SDLT for the Corporate Landlord:
£2,000 + £987,500 = £989,500
| Scenario | Number of Properties | Total Value of Purchase | Total SDLT Payable |
|---|---|---|---|
| 10 Small Landlords | 50 homes (5 each) | £20,000,000 | £2,512,500 |
| Corporate Landlord | 10 blocks of flats | £20,000,000 | £989,500 |
In this scenario, the 10 small landlords are forced to pay a combined SDLT of £2,512,500, while the corporate landlord pays just £989,500—a shocking difference of £1,523,000. The message is clear: the SDLT system is set up to punish small landlords and reward corporate investors with massive savings.
This SDLT disparity has far-reaching consequences, affecting not just landlords but tenants as well. Small landlords offer unique rental options, often tailored to local needs, while large corporate landlords are motivated primarily by profit. As small landlords are driven out, tenants lose affordable options and find themselves subject to higher rents, less choice, and more rigid rental terms.
With the new 5% SDLT surcharge, the government has effectively handed corporate landlords a significant advantage. This rigged system will push small landlords out of the market, concentrating power in the hands of large investors and further destabilising the rental market.
If the government is serious about supporting affordable housing and stable rental markets, it’s time to:
The government’s new SDLT policy isn’t just a tax change—it’s an assault on small landlords, pushing them out of the rental market while giving corporate landlords an easy pass. This rigged system is driving up rents and reducing options for tenants, creating a rental landscape that serves corporate interests over people.
To save the rental market, protect tenants, and prevent monopolistic corporate control, urgent reform is needed. This SDLT scandal reveals a truth that’s hard to ignore: the government has left small landlords to fend for themselves, handing corporate giants a free pass that only fuels inequality.
At Property118, we’re advocating for fairer tax policies that protect small landlords and help them remain competitive in the market. By supporting small, independent landlords, we can ensure that tenants have access to a more affordable, diverse, and flexible rental market.
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Landlords hit by stamp duty surcharge increase to 5% in Budget
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Sign Up9:53 AM, 27th October 2024, About 2 months ago
Thanks Mark, what we have here is market manipulation. They are discouraging certain market participants in favour of others. If banks, insurance companies, you or I tried this for any justifiable position, we would be prosecuted. But the government can do so on a whim.
Having come from a country with no stamp duty, it is a strange concept. Why is it that a transaction associated with moving creates such a high price tag? What is the justification for taking this money? Its a money transfer from the rightful owner for nothing in return. If you and I tried to don't his to a purchaser we would be arrested for theft.
The people in charge of the law are acting like criminals.
Rob Thomas
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Sign Up13:02 PM, 28th October 2024, About 2 months ago
Hi Mark
Thanks for this, but I have a question.
You chose to show the private landlord purchasing five properties of £400,000 as a single transaction for SDLT purposes. Wouldn't a fairer comparison be with the private landlord buying these properties as separate transactions?
So SDLT would be £7,500 per property (£150,000 at 5% SDLT per property), plus the 3% surcharge (£12,000 per property), giving total SDLT of £97,500, still more than £89,500 but not vastly more.
Jason
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Sign Up15:09 PM, 30th October 2024, About 2 months ago
Reply to the comment left by Rob Thomas at 28/10/2024 - 13:02
The 5% surcharge applies to the whole purchase price. So a 400k property is £20k. Buy 5 individually that £100k surcharge on top of the normal SDLT. Marks numbers are correct.
Jason
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Sign Up15:20 PM, 30th October 2024, About 2 months ago
This was always the case right? If you buy multiple flats in a single transaction you would benefit corporate or not. Its the investors choice I personally don’t buy flats anymore too much headache with, leases, cladding, management, argument with noise, fees, high tenant turnover etc…
Cider Drinker
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Sign Up17:56 PM, 30th October 2024, About 2 months ago
Let’s be honest, the government clearly don’t want people buying property a investment. They clearly believe that they can deliver 1.5 million homes without private landlords. I think they are wrong.
Additional property land tax should not apply if the landlord is buying a home for a tenant that only lives in one property. But that’s just not Labour.
Jason
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Sign Up19:03 PM, 30th October 2024, About 2 months ago
Also the
Standard SDLT Calculation:
£0 to £250,000 at 0%: £0 this is correct for the current tax year but its going back to the previous rate of 2% above £125,000 in start of 2025 tax year.
Rob Thomas
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Sign Up11:08 AM, 31st October 2024, About 2 months ago
Reply to the comment left by Jason at 30/10/2024 - 15:09
Please read my example more carefully. I have included the surcharge on all the properties.
DPT
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Sign Up11:27 AM, 31st October 2024, About 2 months ago
To be honest, I don't think that buy to let is a small landlords game any more. The increase in regulation, compliance and taxes and the punitive penalties for simple mistakes make it just too risky. Governments of all hues may introduce strict new legislation, but they don't really want landlords to be prosecuted for breaking it as it just creates bad outcomes for everyone. They know that big corporate build-to-rent outfits are more controllable and less likely to harm tenants so they just want smaller landlords to quietly and gradually leave the stage. Given that objective, increasing the entry tax not the exit tax was probably the right way forward.
Rob Thomas
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Sign Up13:13 PM, 31st October 2024, About 2 months ago
Reply to the comment left by Jason at 30/10/2024 - 15:09
Also, you have completely missed the point I am making. Mark's numbers are correct if the small landlord is purchasing five properties as a single transaction for SDLT purposes.
I am merely pointing out that a small landlord can purchase five properties as separate transactions for SDLT purposes if they wish and this would incur a much lower SDLT bill than the one he presents. My numbers are correct.
Desert Rat
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Sign Up20:03 PM, 2nd November 2024, About 2 months ago
It's quite clear to me why the government are doing this.
They want all rental houses to be owned by the big corporate companies and have being doing everything possible over the last few years to get rid of the PRS.
I currently work overseas, so I now have the 5% and I think another 3% on top of that?
With this rate of stamp duty I can safely say that I will not be buying any more rental houses in the UK. Luckily my last purchase went through a few weeks ago.
I was hoping to buy a nice home for me and my wife next year for about 450k. But with 13% stamp duty after April 1st 2025 and having to pay the UK government up to 50k in tax for nothing. I no longer think that I want to return to the UK.
Rachel Reeves says that she wants people to invest in the UK. For me she has done the opposite. All of my money will now be invested overseas. It's no longer worth investing any money in the UK.