Mortgage brokers have attacked the Chancellor’s "truly aggressive attack" on buy-to-let in his Autumn Statement and Spending Review yesterday.
George Osborne punished landlords with the second major tax hike in less than a year, in what he claimed is a necessary measure to combat the "growing crisis of home ownership" in Britain.
Property investors will be hit by a 3% surcharge on stamp duty from 1 April 2016, which will also apply to people buying second homes.
In a further blow, investors will also have to pay capital gains tax on sales of residential properties within 30 days, in a move that will raise £1 billion a year for the Treasury from 2019.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the Autumn Statement will be remembered for this "aggressive attack" on the buy-to-let investor.
“The Government delivered a staggering kick in the teeth for landlords, with its badly-worded announcement that stamp duty would rise: not a 3% hike but an additional 3%.
“It is a significant increase and could have a devastating impact on the buy-to-let market.”
Harris said a first-time buyer purchasing a £250,000 property after April will pay £2,500 in stamp duty.
“A landlord, on the other hand, will pay £8,800, that is a massive difference. Move further up the stamp duty price brackets and the costs escalate.”
On a £300,000 property the stamp duty bill will more than double from £5,000 to £12,800.
Combined with changes in mortgage interest tax relief announced in the summer Budget, Harris said this will be a huge deterrent to new landlords and those looking to expand their portfolios.
He added: “It could also have a cooling effect on the housing market.”
Financial planning expert Rachael Griffin at Old Mutual said the Government expects to pocket £880 million a year from the measure by 2021.
“Many landlords are already concerned that the margins on buy-to-let investments are being squeezed and for some this may be the final nail in the coffin."
Karen Bennett at adviser service Unbiased.co.uk said the stamp duty surcharge may be the last straw for some landlords.
“The Chancellor said he wanted to deter the buying-up of property by the super-wealthy living overseas, but that isn't who will suffer from this measure - it's the lower-end of the market who may be forced out of it, leaving more property for the super-rich to snap up.
“Some landlords are already finding that on their existing mortgage deals they will now make a loss, not a profit.
“As for how landlords can bounce back from this, the options are pretty limited.”