A change in Stamp Duty Land Tax for the purchase of additional residential properties was announced in the Chancellor’s Autumn Statement:
A change in Stamp Duty Land Tax for the purchase of additional residential properties was announced in the Chancellor’s Autumn Statement. This change means that someone purchasing a buy-to-let property from 01 April 2016 will pay an additional 3% in stamp duty. However, if exchange of contracts took place before 26 November 2015 and the purchase is not due to complete until after 01 April 2016, this transaction will not be subject to the additional rates.
The higher rates will not affect property purchases under £40,000, however, between £40,000 and £125,000 the purchase will be subject to a 3% rate (whereas now the rate is currently 0%). Purchases between £125,001 and £250,000 will be subject to a 5% rate, between £250,001 and £925,000 will be subject to a 8% rate, between £925,001 and £1,500,000 will be subject to a rate of 13% and purchases over £1,500,001 will be subject to a rate of 15%.
The reason behind this is to encourage first time buyers in the market and the Chancellor of the Exchequer said that ‘people buying a home to let should not be squeezing out families who can’t afford a home to buy’. The additional cash reserves (predicted to be almost £1 billion by 2021) will be used to help first time buyers in the property market. It has yet to be seen whether this increase in stamp duty will lead to the extra costs being passed on to renters in the form of higher rents.
All of this means that a property purchase of £275,000 will now pay £12,000 stamp duty – rather than the £3,750 which you currently pay! Now is the time to get purchasing if you want to buy a buy-to-let property!
If this is something you wish to discuss further, please contact us now to speak with someone in our conveyancing department: email@example.com.