Government considers tax cuts for buy to let investors
In an attempt to revitalise the property market and prompt more property developments, the government is considering granting institutional investors a stamp duty concession in order to encourage them into becoming professional landlords.
To date the Treasury has been in talks with property advisors about methods for boosting residential property investment, and so far stamp duty concessions and real estate investment trusts (Reits) are at the top of the list.
Currently stamp duty for property investors is calculated based on bulk buys meaning instead of paying £150,000 in stamp duty fees for 100 properties worth £150,000 each – as you normally would if you were a homeowner – property investors would have to pay as much as £600,000. However, under the Treasury’s new scheme they are proposing that this be changed and brought down to singular stamp duty fees per property to make property investment more affordable and accessible.
And this could be a great move for investors who are looking to expand their property portfolio rapidly. Instead of paying more than 4 times the amount homeowners would – because of 4% stamp duty fees - they will be able to benefit from the same rates as everyone else…
In addition to stamp duty concessions, the Treasury is also considering removing the barriers to investment on residential properties via the use of Reits, a tax-efficient investment vehicle that was established in 2007.
Under their current scheme, investors are able to use Reits to buy shares. However, under their new proposal, property developers will be able to invest in bricks and mortar and escape 2% charges for converting companies into a Reit.
By removing this cost, the Treasury hope to prompt housebuilders and developers back onto the property market, and prevent the growing housing shortage from escalating even further…
As it stands, the Treasury is still in talks about these different methods, but as the market currently stands they are looking more and more likely, especially as the UK is in desperate need for more properties and buy-to-let accommodation.