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Stamp Duty Hike to Cost Landlords £4,000 on Average, Nationwide Reports

In a move anticipated to impact landlords across England and Northern Ireland, Chancellor Rachel Reeves has announced a hike in stamp duty on additional properties. The increase, from 3% to 5%, took effect last Thursday, raising average transaction costs for landlords by around £4,000, according to leading property analysts at Nationwide.

Data from Nationwide indicates that this policy shift will affect approximately 194,000 transactions, or roughly 20% of residential property deals over the past year, based on figures for the year ending June 2024.

Robert Gardner, Nationwide’s chief economist, warns that the stamp duty increase could soften demand in the buy-to-let sector. “We estimate that for a typical buy-to-let purchase, the new rate would add around £4,000 to stamp duty costs,” Gardner stated. “Consequently, this may dampen demand in this part of the housing market.”

Despite the increased costs facing landlords, Nationwide’s latest report suggests that the broader housing market remains relatively stable. House prices rose by a modest 0.1% in October, slowing the annual growth rate to 2.4% from September’s 3.2%.

“The price of a typical UK home increased by 2.4% year on year in October,” Gardner noted. “However, this represented a slight slowdown from the 3.2% pace recorded the previous month. Month-on-month growth, taking seasonal effects into account, was just 0.1% in October.”

Gardner added that recent months have shown resilience in the housing market, with mortgage approvals nearing pre-pandemic levels. “Housing market activity has held up despite higher interest rates, thanks to a strong labour market with low unemployment and robust income gains,” he said. “These factors have bolstered activity and house prices since the start of the year.”

Looking ahead, Nationwide anticipates a gradual recovery in housing activity if the economic outlook remains positive. “Provided the economy continues to recover steadily, we expect housing market activity to strengthen gradually,” Gardner said. “Affordability constraints should ease with a combination of lower interest rates and incomes outpacing house price growth.”

This latest report underscores both the resilience of the housing market and the potential dampening effect of increased transaction costs for landlords, a sector that remains a significant component of residential property transactions in the UK.

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