Have we Reached the Point of Too Much Tax on Property Investments?

When the most recent budget was announced it all became clear that there would be no relief from higher rates of Stamp Duty for institutional investors. Many are seeing this as the pivotal moment that investment property is being taxed too much.

Taking you back to the 2015 Autumn statement that higher rates of Stamp Duty would only apply to the purchase of resident property after 1st April 2016 so long as the purchase was made by an individual who owns more than property.

Since we have just had 2016’s budget it is now revealed that the previous criteria for the higher rates of stamp duty have been amended to also apply to non-individual purchasers purchasing residential property. This means purchases made by companies and institutions are now going to pay the higher rate of stamp duty.

It is said that before the budget was announced, there were talks between government and the industry in order to create a scenario whereby those considering substantial investments in residential property, would find themselves to be exempt. Suggestions were that an acquisition of at least fifteen properties would qualify for an exemption of the higher tax bracket.

The British Property Federation among other lobbied for relief for institutional investors and it was looking as though the deal would be done. At this stage it is clear it has hit the wall.

Such large scale investments are vital for driving the governments schemes related to the property sector, working to meet the governments targets for construction of new homes.

The following rules apply for those purchasing more than one residential property along with an increase in taxation:

  • Higher rates of SDLT for acquisitions by non-natural persons
  • The annual tax on enveloped dwellings
  • Non-resident capital gains tax

While the government has chosen not to provide relief to institutional investors, the government certainly recognises that relief should be provided in other ways for bulk purchase property investors. At this moment in time it remains to be seen exactly what the government will do if anything to assist with those making property investments.

It remains to be seen if the present day housing crisis has been increased rather than eased.

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