The Government announced at the 2015 Autumn Statement, a Five Point Plan for housing to re-focus support for housing towards low cost home ownership for first time buyers.
According to initial reports, for completions on or after 1st April 2016, a large proportion of buyers purchasing buy-to-let investments or second homes will become liable to pay the additional 3% Stamp Duty land tax (SDLT) over £40,000. This is over and above the normal SDLT levy.
The Treasury says the first test of whether a purchase counts as an additional property is if the buyer owns two properties at the end of the day of the transaction. If they do, they will be liable for the extra Stamp Duty. The only leeway is that you can get a refund of the Stamp Duty if you sell your old property within 18 months via the client applying for a refund through HMRC.
For example, a buyer who purchases a qualifying residential property for £200,000 and completes before 1st April will pay £1,500 in Stamp Duty. The same purchase that completes after 1st April will result in a SDLT cost of £7,500.
Professional property companies will be exempt, as will private individuals who have 14 or more properties. How the Government arrived at 14 is anybody’s guess.
The Government is currently assessing it’s consultation with various sectors including legal & will confirm the final policy design at the Budget on 16 March 2016, just two weeks before the change date.
I’ll be interested to see what the final policy design entails for various reasons. Whilst I wholly support assisting first time buyers, I do believe the proposal to be tricky to regulate & I have already seen situations where common sense should but won’t prevail under the above proposals. For example, main residences should not fall under the proposals for people who already own multiples property. However, under the current proposal a person with 4 properties but looking to sell & buy a family home, would be hit with the extra Stamp Duty. It is a shame that Government has made a rod for its own back in regards to declaring ‘main residences’ with the various publicised MP scandals.
Whatever the confirmed changes are on 16 March, there is likely to be changes to SDLT for those wishing to buy a second property.