Budget 2017: What does Philip Hammond’s announcement mean for buy-to-let landlords?

Buy-to-let landlords who have been targeted by a three per cent surcharge on the Stamp Duty have welcomed the decision to scrap it.

This was met with a positive reaction from chartered accountants HW Fisher & Company, who argued the Government is no longer punishing landlords.

Tim Walford-Fitzgerald, private client tax partner, said: “Buy-to-let landlords could be forgiven for pinching themselves. For once they’ve not been the whipping boys of a Budget.

“After years of being portrayed as the villains of the property market, they’ve escaped further unwanted attention from a Chancellor who has instead chosen to focus on the housing market’s fundamentals rather than seeking scapegoats.

“Such a huge stimulus for the property market – both the immediate cut in Stamp Duty and the long-term largesse for house builders – should inject some life into a market that has been weighed down by weakening sentiment and falling real wages.”

But not everything is as great as it may seem. Mr Walford-Fitzgerald thinks that saving on the Stamp Duty is not a long-term solution to help would-be buyers save up for deposit.

The Budget has also given Council’s the power to levy a 100 per cent Council Tax surcharge on empty properties.

The expert added: “For wealthy buyers who snap up UK property just to hold as a rapidly appreciating investment, the measure is likely to be an annoyance that will come off the bottom line rather than persuade them to let properties they see primarily as an asset rather than a home.

“There is one shot across the bows for overseas investors though. 

“The CGT avoidance technique of using a company that holds UK property instead of selling the property itself looks set to be shut down from April 2019, with UK advisers being asked to help police the new regime.”

Another key change in the Budget also targets buy-to-let landlords who have set up as business enterprises, by freezing the indexation tax relief.

The indexation relief applied to landlords who have owned a property for many years, and allowed gains to be reduced based on the length of ownership.  

This will be frozen from 2018 and onwards, which could result in headaches for many landlords.

Genevieve Moore, of Blick Rothenberg, told the Telegraph: “The proposed freezing of indexation allowance for companies is not unexpected and will have most impact on companies that own properties which they have owned for many years.

“Although this is a proposal for freezing indexation allowance, businesses should be prepared for an eventual abolition of the relief in the future and plan accordingly.”

A June 2017 study carried out by the Council of Mortgage Lenders found that at least 34 per cent of UK’s private landlords held at least one buy-to-let property.

The same study found that more than-three quarters of buy-to-let landlords were unconcerned with higher interest payments, with most not expecting to significantly increase rents over the next five years.