3% ‘buy to let tax’ introduced in Autumn Statement 2015


Read our analysis of the announcements made by Chancellor George Osborne during the Spending Review and Autumn Statement 2015.

On 25 November 2015, Chancellor George Osborne delivered his Spending Review and Autumn Statement 2015 to the House of Commons in which he outlined – among many other measures – a new, higher stamp duty rate for people purchasing buy to let properties and second homes.

This latest hit to the buy to let sector followed a range of commitments to UK housing, the majority of which focused on providing help and new homes for first-time buyers.

The tax relief cut was not enough

Despite vocal opposition to the withdrawal of buy to let tax relief announced in the July budget, the Chancellor appears to believe that the measures do not go far enough, claiming that wealthy cash buyers remain unscathed.

He claimed that increasing numbers of properties were being bought as buy-to-let or second homes, and that this activity “shouldn’t squeeze out” people hoping to purchase a home to live in.

As a result, from April 2016, people purchasing buy to lets and other additional properties will be forced to pay an additional 3% in stamp duty, with the revenue raised contributing towards the increased housing budget promised by the Chancellor, including a £60 million investment in communities where the impact of second home purchases is believed to be “particularly acute”.

What the new buy to let stamp duty rates will look like

Proportion of property

SDLT rate

Up to £40,000 (for properties worth under £40,000)


Up to £125,000 (for properties worth £40,000 or more)


£125,001 to £250,000


£250,001 to £925,000


£925,001 to £1.5 million


Over £1.5 million



Gov.uk - Autumn spending  review and autumn statement 2015



What this means for landlords

If the proposals are understood, this means that landlords will begin paying stamp duty on properties worth over £40,000, rather than £125,000 as is currently the case.

This also means that tax on purchases will be significantly higher for landlords. At present, the purchase of a property worth £150,000 would accrue just £500 in tax. Under the new system, the stamp duty tax bill for someone buying a buy to let property or second home worth £150,000 would be £5,000 – a tax increase of 1,000%.

Government to consult on new tax

The spending review outlines how the government intends to consult on the policy in detail, including proposed exemptions. Of note is the possible exemption for corporate investors with portfolios of more than 15 residential properties, sending further strong signals that the government wishes to increase institutional investment in the rental sector and push private investors out.

Other housing measures announced

  • Doubling the housing budget to £2 billion per year from 2018–19
  • Delivering 400,000 affordable homes by 2020–21, including
    • 200,000 discounted starter homes for first-time buyers
    • 135,000 Help to Buy: Shared Ownership homes
    • 10,000 rent-to-buy homes, which will allow tenants to save for a deposit to buy the house they are renting
  • Extending the Help to Buy: Equity Loan scheme to 2021 and creating a Help to Buy scheme specifically for London that will offer a higher equity loan of 40% to buyers with a 5% deposit
  • Launching a Right to Buy pilot in five housing associations from midnight on 26 November 2015
  • Selling £4.5 billion of government land and property to create space for 160,000 new homes
  • Releasing unused and underdeveloped commercial, industrial and retail land
  • Selling old prisons and underused courts to create space for 3,000 new homes
  • Extending the £1 billion Builder’s Finance Fund to 2020–21
  • Extending £2.3 billion in loans to regenerate large council estates and invest in major housing development infrastructure

The controversial tax credits cuts have also been reversed

The Chancellor also announced that the planned £4.4 billion cuts to tax credits, which were famously defeated in the House of Lords in October, would be scrapped.

The Institute for Fiscal Studies predicted that the cuts would have left 3 million of the UK’s poorest families £1,000 per year worse off: Institute of Fiscal Studies budget analysis

The Chancellor claimed that an £8 billion reduction in the borrowing forecast has allowed the government to avoid the changes altogether, meaning that the tax credit thresholds and taper rate will remain unchanged.

The decision does, however, mean that the Chancellor will need to breach the welfare cap that he set in his 2014 Budget (www.bbc.co.uk/news/business-26647831); though he claims that the cap will be met in the “later years” of this Parliament.

Key points from Autumn Statement 2015

To read the government’s summary of the key points from today’s announcement, visit the GOV.UK website: https://www.gov.uk/government/news/spending-review-and-autumn-statement-2015-key-announcements

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.