Budget 2016: Stamp duty hike on investment homes applies to corporate investors too, says chancellor

The property industry has branded chancellor George Osborne鈥檚 decision to increase stamp duty on investment homes bought by institutions in today鈥檚 Budget as a 鈥渉uge blow鈥� to the nascent build to rent sector.

Osborne had announced the stamp duty hike in his 2015 Autumn Statement, but initially said that corporate investors would be exempt from the charge, which was designed to deter second home owners.

But in today鈥檚 Budget documents, it says: 鈥淭here will be no exemption from the higher rates for significant investors, and the higher rates will apply equally to purchases by individuals and corporate investors.鈥�

The additional charges mean buyers of investment properties will pay 3% more tax than for normal house sales.

Melanie Leech, chief executive of the British Property Federation, said the government鈥檚 decision to not include an exemption for investors who are purchasing large portfolios of properties for rent was 鈥渆xtremely disappointing鈥�, and dealt 鈥渁 huge blow to the build to rent sector鈥�.

She added: 鈥淭his is going to be a significant deterrent to the institutional investment currently poised to settle in the purpose-built rented sector, which has the opportunity to deliver a significant number of new, quality affordable homes.鈥�

Leech said the property industry would also be hit by proposed changes to the tax deductability of interest on earnings. Elizabeth Bradley, head of the corporate tax team at international law firm Berwin Leighton Paisner, said: 鈥淢uch of the British property industry will be very disappointed with today鈥檚 Budget changes. The property sector is effectively being used to placate the Government鈥檚 back benchers.

鈥淭he Chancellor has acknowledged the need to build more homes, but the extension of the extra SDLT rate on buy-to-let to large investors will discourage investment in the private rented sector.鈥�

 

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