This means that if a property portfolio is sold at £10million with the average price of the individual properties at less than £175,000, the stamp duty tax payable would be one per cent, equal to £100,000 rather than at 5pc, equal to £500,000.
As well as saving investors a small fortune Landlord Assist says the change will make the buy-to-let sector more attractive to new investors and encourage more professional landlords and larger institutional investors to build up their portfolios.
This in turn will help to address the shortage of rental properties and new homes, which is currently at its lowest level.
Graham Kinnear, MD at Landlord Assist says: “The new proposals are a timely boost for the private rented sector, especially at a time when more people, especially young professionals, are choosing to rent rather than buy.
“The new measures should incentivise investors to expand their portfolios, which will boost the supply of homes for rent. Previous stamp duty costs significantly pushed up the cost of acquiring large portfolios, so landlords letting single properties, not surprisingly, were reluctant to expand.”
The new relief is expected to apply from this summer when the 2011 Finance Act comes into effect.
Stephen Parry, Commercial Director at Landlord Assist says: “We have called on Government for a long time to identify the private rental sector as a way of solving Britain’s housing shortage.
“This move, although long overdue, should encourage institutions and pension funds to consider residential property as an investment medium. This will lead to more quality houses available to let.”
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