In the UK budget, George Osborne announced an extra tax charge on Buy-to-let mortgages. This extra fee, payable from 6th April will be 3% on buy-to-let or second home purchases. However, people who structure their tax affairs as a corporation, or are companies buying property, are exempt. With the extra tapering off of tax relief from next April announced in the 2015 budget, this could have an interesting effect on the London property market, as smaller investors may step back. What I can't see is how this is going to limit the amount of buy-to-let property being bought by foreign investors or corporations (up to a third of the market last year), which is part of the reason why London property prices are rising so fast. Overseas mortgages or direct purchases make the tax taper irrelevant, and from the newspapers it seems most landlords are already working out how to pass the extra cost onto tenants. REITS which invest in UK residential property, particularly in London, may do well out of it as they are already structured to avoid the extra costs and they will have less competition. But does this make buy-to-let in the UK a cautious investment at the moment, even with some house builders and developers offering to pay the stamp duty on purchases?