Landlords, investors and small developers are bracing for a “brutal blow” in the Autumn Budget as speculation grows over radical property tax reforms, against a backdrop of soaring stamp duty receipts.
Figures from HMRC show that Stamp Duty Land Tax (SDLT) revenues jumped 22% in the past year to £14.6 billion, up from £12 billion the year before.
The surge comes as the Treasury weighs measures that could fundamentally reshape the property tax landscape.
And Louis Alexander, chief executive of Somo, a leading property-backed finance provider, reckons landlords and investors are now contributing far more stamp duty than before.
REAL UNCERTAINTY
He says: “With another Budget weeks away, there is a real uncertainty about what comes next for their increasingly eroding yields. Bridging finance may be what gives landlords and investors the flexibility to keep deals moving despite shifting tax rules.”
Among the proposals under discussion are the replacement of SDLT with a new national property tax levied annually on homes worth over £500,000, the introduction of a so-called mansion tax by scrapping capital gains exemptions on the sale of high-value properties, and the extension of National Insurance to landlords’ rental income.
SQUEEZED YIELDS
Although still only ideas, the prospect of sudden changes has already unsettled the market. Landlords warn that piling more tax onto rental income or property transactions could force rents higher, squeeze yields further and choke off investment.
Smaller developers and SMEs are also at risk, industry figures say, with higher upfront costs potentially leaving them reliant on short-term finance to survive.
With mainstream lenders still cautious, bridging lenders are increasingly stepping in to provide the speed and flexibility needed to keep projects afloat.
The Treasury faces mounting pressure to reform property taxation, but industry figures warn that poorly targeted measures could have unintended consequences for housing supply and affordability.
