In his autumn statement the Chancellor announced proposals that would drastically increase the rate of Stamp Duty Land Tax (SDLT) for people buying buy-to-let properties or second homes. The proposals were subject to consultation until 1 February 2016 and the final version of the proposals are due to be announced at the Budget on 16 March 2016.
Assuming the proposals do not change materially, the proposals will mean that anybody buying a buy-to-let property, or a second home, with a completion date after 1 April 2016, for more than £40,000.00 will have to pay an additional 3% SDLT surcharge on top of the current rates. For example the SDLT payable on the purchase of a buy-to-let property for £200,000.00 will increase from £1,500.00 to £7,500.00.
A person who already owns a second home or a buy-to-let property will not pay the higher SDLT rate if they move house themselves, as they will be replacing their existing main residence with a new one.
Anybody who buys a new main residence, but who has not sold their existing one, will have to pay the higher SDLT rates on the occasion of the purchase as they will own two properties on that date. However, if the original property is sold within 18 months of that date then a refund of the additional SDLT will be paid.
If someone decides to buy a new home as a main residence, but wants to rent out their existing home instead of selling it, they will be liable for the higher SDLT rates because they will own two properties at the end of the process.
If anybody wants to buy a buy-to-let investment property as their first property, the new SDLT rates would not apply as only one property would be owned at the end of the process.
If you would like further information about the impact of the new SDLT rates then please contact David Inch on 01295 204015 or email firstname.lastname@example.org.