The Stamp Duty surcharge will fail to deter buy-to-let investors, according to new analysis from Jackson-Stopps & Staff.

Instead the estate agent has worked out that in eight out of 10 UK regions projected annual property price growth will eclipse the extra Stamp Duty for landlords.

And the firm predicts that that the biggest losers of the Stamp Duty reform will actually be tenants as landlords pass on their additional costs by way of rent hikes.

Southern boost

If property prices continue to grow at their current rate in the South East region, the capital gain on an average priced property will be £28,412 annually. Total Stamp Duty on the purchase of an average priced home will be just £11,328 under the new proposed Stamp Duty regime for second homeowners, far less than half the potential capital growth.

According to the Association of Residential Letting Agents (ARLA) the vast majority of landlords keep their investment property for more than one year, and therefore benefit from the positive impact of house price growth in the longer term.

Nick Leeming, chairman at Jackson-Stops & Staff, said: “The Government, through its new Stamp Duty surcharge, is trying to make the playing field more even between property investors and first-time buyers by eating into landlords’ profits. Our message to landlords is that when you do the sums, and look at the direction of house prices, placing money in bricks and mortar is still by far the best investment vehicle.

“If property prices continue on their current trajectory, within a year or less of buying their investment property the vast majority of landlords would have earned back all the money given through Stamp Duty, even with the new 3% surcharge, by doing nothing at all.

“In fact, the only losers will be tenants as landlords are likely to pass on any additional costs they might not want to shoulder to their tenants by increasing rents. This could mean that those currently in rented accommodation who are saving for a deposit to buy a home, take even longer to pull this money together.”

Grim up North

The only regions where predicted capital gains on an average priced home do not eclipse Stamp Duty costs in the first year are the North East and North West of the UK.

Leeming said: “These two regions are also the only two where home owners currently pay no Stamp Duty on the average home as the average property price still remains under £125,000, the price level where Stamp Duty first bites. Tenants here are more likely to see landlords in future pass on this additional cost via rent and we also anticipate investors to be more assertive when they negotiate on buying a home, which will be reflected in lower offers.”