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.

To arrange a dis­cus­sion about Stamp Duty or the home buy­ing process, please get in touch with Rick Bar­row on 01625 523988 or mail@​JBGass.​com