Posted in Property
As many of you may be aware, changes proposed by Chancellor George Osborne which take effect at the start of April governing the buy to let market, will affect everywhere in the UK, but particularly London where prices are considerably higher than the rest of the country. As things currently stand you must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price, and what you pay depends on whether the property is residential or non-residential.
Our current thresholds are £125,000 for residential properties, and £150,000 for non-residential land and properties, with stamp duty on an increasing scale dependent on the property price above the threshold. Currently, on buy to let properties the SDLT rate is 2% of the purchase price from £125,001, 5% from £250,001, 10% from £925,001, and lastly 12% on anything above £1.5 million.
However, from April 2016, property investors in England and Wales will have to pay an additional 3% on each stamp duty band- with the 2% moving to 5% and the 5% moving to 8%.
To illustrate this, anyone buying a £200,000 second home or buy to let before April pays stamp duty of £1,500, which is based on paying nothing on the first £125,000 of the property value and 2 per cent on the portion between £125,001 and £250,000. But from April, landlords will have to pay 3 per cent for the first £125,000 and 5 per cent instead of 2 per cent on the amount between £125,001 and £250,000, which gives them a massively increased bill of £7,500.
As we said, these changes are due to take effect soon and are likely to only affect you if you already own a main residence, which includes buy-to-let landlords, buying in the name of your spouse or civil partner, purchasing a property for your children to live in and/ or buying a property if you already own a home abroad. However, you may be able to obtain a refund of the extra duty paid if you sell your former main residence within 18 months of purchasing your new one.
Chancellor George Osborne’s Autumn Statement included positive announcements, such as an extension of the Help to buy scheme in London, which as many of us operating from the capital know is welcome. Also, there were increased funds for the Starter Homes programme. However, if you wish to keep your stamp duty payment as low as possible on the purchase of your new buy-to-let property or second home, now is the time to act as 1st April 2016 is getting close.
Any queries involving buy to let, conveyancing quote or any other matters surrounding property including remortgaging and transfer of equity, our conveyancing specialist are happy to talk to you the key conveyancing issues and the new stamp duty changes.
If you have any questions the conveyancing solicitors at Pindoria Solicitors will quickly put your mind at ease, so contact us today.