Excellent experience start to finish – always very responsive to any queries and the turnaround on the property I was buying was very quick, even in the busy time leading up to stamp duty deadline. Jenny was always very helpful and went above and beyond to close on a short timescale.
In the 2015 Autumn Statement, the government announced changes to the current stamp duty charging calculations in respect of the purchase of additional residential properties at a value of more that £40,000. The proposed changes will mean that from April 2016, purchasers of a second property in England and Wales will have to pay a 3% surcharge on each stamp duty band.
The changes will affect the purchase of buy to let properties and also the purchase of second homes or holiday homes. Please see the table below to illustrate the changes:
|Property Value||Current Rate Payable||Buy To Let / Second Home Rate (as from April 2016)|
|Up to £125,000||0%||3%|
|£125,001 – £250,000||2%||5%|
|£250,001 – £925,000||5%||8%|
|£925,001 – £1.5m||10%||13%|
As an example, the purchase of a second property worth £250,000 will attract stamp duty at a rate of 5% rather than 2% meaning a substantial increase in the tax due from £2,500 to £8,800.
One of the reasons given by the government for the change is that some of the additional revenue created by the uplift will be invested in initiatives to assist communities where the rise of buy to let buyers has impeded first time buyers getting a first step on the property ladder. The opposing argument is that the increase will have a detrimental effect on the investment market for rented properties. Would be landlords should also take tax advice on the proposed changes to Capital Gains Tax in respect of which period CGT from the sale of property will need to be paid.
Subject to consultation, commercial investors with more than 15 properties may be protected from the rises, but as a whole anyone looking to invest in the property market would be well advised to ensure they are clear that more stamp duty will be payable for any completed purchase from April this year.
It should also be noted that these changes will apply to purchase completions from 1st April 2016, regardless of whether exchange of contracts took place prior to the date that the changes were announced.
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