Second home buyers to pay extra 3% stamp duty

Written on 26 November 2015 by Alistair Boscawen in Property News

Buy-to-let investors who will be hit by the 3% hike in stamp duty announced by Chancellor George Osborne this week can offset the higher purchase costs against any eventual capital gains tax. 

In his combined Spending Review and Autumn Statement, Osborne revealed that purchasers of second homes will pay up to 15% stamp duty from April 2016.

Second home buyers to pay extra 3% stamp duty
Landlords attack government after Chancellor George Osborne raises stamp duty land tax rate to up to 15% for purchasers of second homes

The new stamp duty surcharge will lift each band by 3%. For properties worth between £125,000 and £250,000, where the stamp duty is 2%, buy-to-let landlords will pay 5%. Properties worth between £251,000 and £925,000 will be subject to 8% SDLT, which rises to 13% for second homes worth between £925,001 and £1.5m and 15% for investment properties worth over £1.5m.

The higher rates will not apply to the purchase of caravans, mobile homes or houseboats, or to corporate funds making significant investments in residential property.

The move has the potential to disrupt the prime central London property market over the next four months as landlords and second homeowners rush to beat the April deadline.

Landlords also accused the government of trying to kill the buy-to-let sector altogether. Richard Lambert, chief executive of the National Landlords Association, said: “If it’s the Chancellor’s intention to completely eradicate buy to let in the UK then it’s a mystery to us why he doesn’t just come out and say so?”

In his summer Budget, the Chancellor announced that from 2017 the amount of tax relief on mortgage interest payments that landlords can claim will be cut from up to 45% to 20% by 2021.

And from April 2019 buy-to-let investors will have to pay any Capital Gains Tax due within 30 days of selling a property, rather than waiting till the end of the tax year as at present.

But the government currently allows second home owners to offset purchase costs – including stamp duty – against any eventual CGT.

Osborne explained: “This extra stamp duty will raise almost £1bn by 2021 – and we’ll reinvest some of that money in local communities in London and places like Cornwall which are being priced out of home ownership.”

For more information, click on the link below:

The Telegraph

Alistair Boscawen

Alistair has 32 years’ experience as an estate agent, starting in the country house department of one of London’s main international agencies before moving to the Knightsbridge house department of the same agency and learning the difference in values between freehold, long lease and short lease houses in Knightsbridge, Belgravia, Chelsea and Mayfair.

All articles by Alistair Boscawen


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