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'Landlord tax' stamp duty changes raise £2bn a year from buy-to-let and second home owners - double the amount expected


08-26-2017

'Landlord tax' stamp duty changes raise £2bn a year from buy-to-let and second home owners - double the amount expected

 
Originally it had estimated it would make £1bn a year from the policy in the four years between 2016 and 2020 Credit: Chris Radburn

The Government's stamp duty changes are raising twice as much money from home buyers as initially expected, HMRC figures show.

Analysis by accounting firm Blick Rothenberg shows that the Treasury has so far pocketed as much has £2bn as a result of the 3 per cent "landlord tax".

Originally officials had estimated it would make half as much from the policy in the four years between 2016 and 2020.

Under the policy, which was introduced in April 2016, anyone buying a second home or buy-to-let property must pay an extra 3 per cent in stamp duty on top of ordinary stamp duty.

The figures suggest that the policy has not significantly deterred landlords or second home owners from buying up properties.

Robert Pullen, Director at Blick Rothenberg, said: “The Government will need to urgently consider whether the additional 3 per cent stamp duty policy is helping achieve fairness in the property market, or if it is creating more problems than it is solving.”

“The policy intention was always stated to be to realign the residential property market to make it fairer for first time buyers.

"It is becoming clearer, however, that as prices continue to rise the measure has succeeded only in generating extra tax for HMRC as well as a sluggish property market, evidenced by the number of property transactions falling.”

The Telegraph is campaigning to remove stamp duty after a raft of evidence has shown it is impacting the economy and creating social problems by preventing families from moving.

Last week Conservative MP Jacob Rees Mogg told the Telegraph that stamp duty must be cut "as a matter of urgency" as part of a return to Conservative values if the party is to win the next election.

To calculate the £2bn figure Blick Rothenberg compared HMRC data from the year ending July 2017 to the year ending in the same month 2015, during which time a virtually identical number of residential properties were bought. 

In the year to July 2017 it took £12.4bn in stamp duty, a £2bn increase from the year ending July 2015 when it took £10.4bn in stamp duty.

While some of the difference will have come from rising house prices, the majority of the increase is the result of the extra stamp duty charges, experts said.

In last year's Autumn Statement the Treasury quietly raised its expectation of how much it would raise by 76 per cent to £6.9bn over the period, or £1.7bn a year. This is roughly in line with the results of this latest analysis.

Separately there are also fears that excessive amounts of stamp duty being charged on the purchase of expensive properties is causing the market to dry up. 

The Office for Budget Responsibility has warned that stamp duty is threatening the economy because the owners of more expensive properties now pay so much tax.

Ministers, peers and think tanks have urged Philip Hammond, the Chancellor, to cut the duty- dubbed a "tax on moving" in his Autumn Budget, amid fears that it is stifling the housing market. The OBR, the official economic watchdog, said that revenues from stamp duty are now "highly concentrated" on the sale of more expensive homes.

A Treasury spokesperson said: “We have cut stamp duty for 98 per cent of those who pay it when buying their main home, so that more people can achieve their dream of becoming home owners”

“The latest statistics show that transactions are rising. In fact, July saw the highest number of people buying or selling a home since March 2016”

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