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Tax warning for property investors

A property expert is warning investors they will face increased taxes next year following announcements in the recent Autumn Statement.

George Osborne announced a number of tax measures which will hit property investors. These include increased Stamp Duty Land Tax charges from April 1 next year for additional residential properties, including second homes and buy-to-let.

Fears have been raised by some in the property sector that the move is an ‘attack’ on small private landlords, as the new rates will not apply to corporate investors or funds investing in property.

The rates will mean for additional properties, an extra 3 per cent tax will be charged on properties worth less than £125,000, and 5 per cent on those worth between £125,001-£250,000.

With the average buy-to-let investment worth a reported £184,000, currently subject to a 2 per cent stamp duty charge, owners will soon face an additional 5 per cent tax.

The news comes as the Bank of England announced it is set to examine the terms buy-to-let mortgages are granted under, reportedly before it decides whether action is needed to slow the market.

Sarah Barnes, head of Residential Property at Napthens solicitors, said: “While there were no big surprises from George Osborne’s statement this year, it was clear that property investors are being targeted by both the Government and now potentially the Bank of England.

“This additional tax is clearly targeting those individuals who have second homes which may be standing empty part of the year – an issue in the south of the country but not so much in the north.

“However, it is likely to seriously impact investors who have multiple properties, who are therefore making a living from their investments and will have most to lose.”