During his budget on March 16, chancellor George Osborne made some small but significant changes to his original proposals to introduce a higher rate of stamp duty land tax on second homes and buy-to-let properties.
Hannah Craig explains the confirmed changes and the potential implications for buy-to-let investors.
Following a period of consultation on his initial proposals to increase the rate of stamp duty land tax on second properties, George Osborne’s budget has clarified that the three per cent SDLT surcharge will still apply if you buy an additional home.
However, there have been some alterations to the original proposals which will come as a nasty surprise to large scale investors.
Initially, it was thought there would be an exemption made for corporate bodies and funds owning more than 15 residential properties, but the budget confirmed that this would not be the case.
This is likely to have a significant impact on investors, particularly in the burgeoning build to rent sector where it thought that funds and individual investors may have to reassess their business plans for the buy-to-let market.
On a slightly brighter note, another change from the original proposals is that the period during which homeowners can claim a refund on the SDLT surcharge if there’s an overlap between owning two properties has been extended to 36 months, from the 18 months originally proposed.
In terms of the confirmed SDLT bands for second homes, these will apply to qualifying purchases over £40,000. They have been confirmed as:
- 3%: £0 – £125,000.
- 5%: over £125,000 – £250,000.
- 8%: over £250,000 – £925,000.
- 13%: over £925,000 – £1.5 million.
- 15%: over £1.5 million.
It should be emphasised that these figures only apply to homeowners with more than one residential property. They will operate in the same way as basic rates in that they will be payable only on the portion of a property price that falls within each band.
It should also be noted that there remains a number of exemptions from stamp duty land tax for certain types of transactions and, as always, those buying or investing in property should always seek professional advice.
For more information on the impending stamp duty changes for additional properties, please contact Hannah Craig on 01772 258321.
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