SD Hike: A Blow to Renters in a Strained Market

Opinion

The recent Budget announcement of a 5% stamp duty hike on second homes and investment properties is set to make an already challenging rental market even worse. By raising stamp duty on second homes from 3% to 5%, Chancellor Rachel Reeves claims to be aiming to improve access for first-time buyers. However, this approach risks doing the opposite, reducing the already limited supply of rental homes even further.

The National Residential Landlords Association (NRLA) has voiced strong concerns over this policy, warning that it will likely lead to a substantial drop in rental stock. Estimates suggest that raising stamp duty on rental properties could result in a net loss of half a million rental homes over the next decade. For renters who cannot afford to buy, this will mean fewer choices and higher costs—ultimately worsening the housing crisis rather than solving it.

The decision to keep Capital Gains Tax rates on residential property steady at 18% and 24% may offer some relief for landlords, but it’s little consolation against the financial strain introduced by the stamp duty hike. Additionally, freezing housing benefit rates shows a lack of alignment with actual market conditions. With rents consistently rising across the UK, benefits that don’t reflect real housing costs make it nearly impossible for low-income renters to access or sustain a stable tenancy.

This stamp duty hike will likely add further financial strain on landlords, who, indeed, most probably will pass these costs on to tenants. The Chancellor has also disregarded warnings from the Institute for Fiscal Studies (IFS), which has clearly stated that tax increases in the rental market lead inevitably to higher rents. This policy is anything but a solution for the thousands of renters for whom homeownership remains out of reach; instead, it pushes them into even more precarious situations.

While the Chancellor’s attempt to encourage first-time home buying may be well-intentioned, the method—an added burden on landlords—will only make things worse for renters. Renters need stability, access to quality housing, and policies that prioritise a sustainable, long-term rental supply. Unfortunately, this Budget misses the mark, opting instead for measures that will further strain an already tight housing market.

Disclaimer: The views expressed above are based on industry reports and related news stories and are for informational purposes only . SSIL does not guarantee the accuracy, legality, completeness, reliability of the information and or for that of subsequent links and shall not be held responsible for any action taken based on the published information.