Budget 2024: 5% stamp duty hike will hit supply of homes to rent

1st November 2024

Landlords will need to pay stamp duty of 5% when purchasing additional properties, a move the NRLA believes will only exacerbate the housing supply crisis.

Rachael Reeves made the announcement in yesterday’s Budget (Oct 30) with the change to come in immediately.

This will come as a blow to those landlords out there planning to invest – something we need to happen if we are to provide the homes to let that the country so desperately needs.

Latest figures from property portal Zoopla show there are now 21 people are chasing every rental property – shocking figures that the tax hike will do nothing to tackle.

Indeed analysis for the NRLA by Capital Economics found that increasing stamp duty on rental properties from three to five per cent will see a net loss of half a million homes to rent over the next decade – a sobering statistic.

We also share the concerns of the Institute for Fiscal Studies, which pointed out earlier this year that higher taxes on the rental market only leads to rents going up.

In short, this change will only lead to fewer options for tenants when it comes to choosing a home and higher rents once they have found one.

However, I have to say, it’s not all doom and gloom and – looking at the overall picture –things could have been much worse.

With all the rumours swirling ahead of time as regards potential increases to Capital Gains Tax it was a relief to see that rates on residential property frozen at current levels.

While Capital Gains Tax was increased overall, the change simply renewed the old status quo, removing the distinction between asset classes.

And although the stamp duty change is not good news when it comes to encouraging investment – something we need if we are to tackle supply issues within the private rented sector – it is clear the other changes would have more of an impact.

In simple terms, while the stamp duty hike will hit you if you plan to buy more homes, it will not affect your existing portfolio in the way other tax changes could have done.

There was other positive news when it comes to housing, with the chancellor also confirming plans to:

• allow local authorities to retain the full receipts of right to buy schemes to reinvest in new housing.

• hire hundreds of new planning officers ‘to get Britain building again’

• invest £1 billion in removing dangerous cladding over next year.

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