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Insight & Opinion

Budget brings little in the way of positives for the buy-to-let market

Author: Staff





In 2015, the chancellor George Osborne dealt a double blow to the UK’s rental market when he announced that there would be a move away from the ability of buy-to-let investors to deduct mortgage interest from taxable income, as well as bringing about the introduction of a new Stamp Duty levy amounting to three per cent on second-home purchases.

Budget announcement for 2016

However, headed into today’s (March 16th) Budget announcement for 2016, there was some hope that there would be a reprieve this year for landlords and investors after a period of governmental difficulty. Sadly, this proved not to be the case, with Mr Osborne announcing yet more bad news for the sector.


With just under a month to go until the introduction of the Stamp Duty levy that many believe will drive investment away from the private rented sector in the UK thanks to the increasing cost of purchasing stock, the chancellor has now revealed that investors in the sector are to be excluded from the Capital Gains Tax changes that many other sectors will welcome with open arms. Read more about Stamp Duty changes…

Capital Gains Tax

Mr Osborne said as part of his speech today that the highest band of Capital Gains Tax will be slashed from its current level of 28 per cent to just 20 per cent. The lower band will drop at the same time from its current level of 18 per cent to just 10 per cent as of the start of the new tax year in April. However, gains made on residential property will not be eligible on the decreased rate.

Other changes included National Insurance breaks for some people across the country, and the introduction of a sugar tax that is designed to fight obesity while raising £500 million for the economy.

In what is now the third Budget in a row that has hit landlords and property investors, Mr Osborne announced that the Capital Gains Tax cuts will not apply to those who are purchasing rental properties, leading many in the sector to question whether or not the chancellor simply has something against the growing rental market.

2016 Budget Reaction

Jamie Morrison, private clients partner at the chartered accountants HW Fisher & Company said that it would be completely understandable for investors to believe the chancellor has something against them, adding that investors are once again being sacrificed to push the government’s agenda of getting more people onto the housing ladder, despite more than four million people living in rented properties across the booming sector.

“With more incentives to help savers and first time buyers get on the property ladder, buy to let owners have once again been cast in the role of fall guy,” Mr Morrison said.


David Cox, managing director of the Association of Residential Letting Agents (ARLA), said: “The sector has been punitively taxed, with Stamp Duty on buy to let properties, mortgage interest relief and now capital gains tax changes. It’s an outright assault on the sector.”

He went on to add that every other sector has been offered incentives and tax breaks that will help them to grow and thrive down the line, while the buy-to-let market has simply been struck by cuts, extra charges and increasing difficulties in continuing to provide the valuable service it does.

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