Home News Budget 2024 – Stamp Duty Land Tax Raised for Landlords

Budget 2024 – Stamp Duty Land Tax Raised for Landlords

31st October 2024 Rooms For Let

The government has raised Stamp Duty Land Tax (SDLT) for landlords to 5% on properties purchased up to the £250,000 threshold. Previously this rate was 3%, a huge increase when considering the value of properties.

Increased tax liability will discourage many small landlords from entering the market or cause existing landlords to increase their rental portfolio.

This will almost certainly cause upward pressure on already high rents.

Is There an Upside for Landlords?

There is little upside here apart from increased tax receipts for the government, where landlords purchase properties. Indeed, for the landlord, this is a further additional cost that cannot be seen as anything other than stifling to their business.

Will SDLT Changes Affect Tenants?

Tenants will also suffer from higher rents, not only due to the potential reduction in available rental stock and the lack of new stock coming on to the market but also as landlords look to offset some of the loss in the SDLT payment.

What Landlords Will Be Affected?

This will mainly affect small landlords purchasing individual properties, likely for the local market or smaller HMOs with rooms to rent. Larger corporate landlords would have a far lower SDLT bill due to non-residential SDLT and purchasing additional properties as one transaction.

This disparity could force smaller landlords out of the sector, which would have a major impact on tenants and rental prices.

As a small landlord with rooms to rent, have you considered increasing your portfolio and changed your mind because of this change? Please let us have your thoughts by contacting RoomsForLet here.

These changes are tailored to help the larger corporate landlord and are likely to apply upward pressure on rents. There will also be a knock-on effect in the general housing market as fewer buyers are looking to purchase properties.

Many landlords will likely think twice before entering the rental market or increasing a portfolio.

What Other Budget Changes Will Affect the Rental Market?

That said, the fact that Capital Gains Tax (CGT) remains unchanged in the budget could be a stabilising factor in that many Landlords who may have considered selling may now hold on to their rental properties. At least this can be some good news for landlords in general.

Will These Changes Affect Home Owners with Rooms to Rent?

These changes wouldn't affect those looking to purchase homes and rent spare rooms as long as the property was their prime principal residence.

Assuming the property is purchased to live in, and it is not a second home, no SDLT would be payable up to £250,000. Additionally, due to the government Rent a Room scheme, no tax would be payable on rents up to an annual amount of £7,500.00.

You can Register here as a landlord to rent a room.

Looking for Rooms To Rent or Spare Rooms?

If you are a tenant seeing higher, unaffordable rents, you may wish to look at other options. Rooms to rent in shared houses or spare rooms in the owner's house can offer a far cheaper option with a reduced rent amount, which would usually also include bills.

Whilst house sharing isn't suitable for all, such as families with children, it can be a reasonable solution for many. If you are looking for a room to rent, please register as a tenant here to match with available accommodation or find a room here.

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