Stamp Duty cut in mini-Budget - how does this affect landlords?

September 29, 2022

In his first fiscal address as Chancellor, which was labelled as a mini-Budget, Kwasi Kwarteng carried out a range of tax cuts including a stamp duty cut for buyers in England and Northern Ireland.

Here, we set out what was revealed and what it means for landlords.


A cut to stamp duty

Chancellor Kwarteng told the Commons as he presented his mini-Budget: “Home ownership is the most common route for people to own an asset, giving them a stake in the success of our economy and society."

“This is a permanent cut to stamp duty, effective from today,” he added.

The threshold at which the tax falls, currently at a £125,000 level, has been raised to £250,000 and additionally, the threshold for first-time buyers has also been increased from £300,000 to £425,000.

Kwarteng claimed that this change should remove 200,000 people from having to pay stamp duty altogether.

How are landlords impacted?

Additional purchasers such as landlords are included in the stamp duty cut. While some suggested that buy-to-let landlords shouldn’t be included in any stamp duty cut, the complexities of excluding landlords and keeping them on the old threshold would have bene considerable – not to mention highly controversial.

But what does the stamp duty cut mean for landlords, who already pay an additional surcharge of 3% on top of normal levels of stamp duty for their purchases?

If we take a landlord purchasing a new property with a value of, say, £300,000 under these new stamp duty rules – which have come in with immediate effect – the saving is quite stark. While previously you would have been shelling out £14,000 in stamp duty, now that figure would be £11,500 – a not insignificant saving of £2,500.

With supply still an issue in the lettings sector, this could encourage a landlord – already disincentivised by various taxes on their investment – to purchase a home they might otherwise have thought twice about.

Others, however, will argue that this saving won’t be enough to encourage landlords to invest.

Meanwhile, there is a school of thought that the new government’s tax-cutting agenda – which could, in turn, lead to interest rates rising significantly – might impact on the profitability of buy-to-let landlords, which a stamp duty cut will do little to negate.


In truth, though, the situation remains fluid and uncertain, and it won’t become clear for a while yet the impact of Truss and Kwarteng’s high-risk economic agenda.


For the moment, though, some landlords will be cheered by the potential stamp duty savings they will make, while potentially also considering fixing in their interest-only mortgage for a longer period.


Now remains a good period to be a landlord, with demand continuing to outstrip supply, while investing in property – which has been a very stable asset class, offering good returns, in recent years – might be a wise move at a time when the economic situation looks unclear.


Here at Farrell Heyworth, we operate in the busy North West towns and villages of Southport, Lancaster, Morecambe, Preston, Bolton, Ormskirk and Chorley. Our Southport and Ormskirk service areas no longer offer a sales service, they are exclusively lettings. To find out how we can assist you on your lettings journey, please get in touch with us today.


We encourage all our customers to register with our My FH portal, which will give you access to the most up-to-date information; remotely and at your convenience.


You can also find out how much you could be charging on the local rental market by requesting a free and instant online valuation today.

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