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Landlords guide to stamp duty changes

Landlords guide to stamp duty changes

From 1 April 2016, anyone who buys additional property, including buy-to-lets and second homes, will have to pay an extra 3% of the purchase price in stamp duty. Read this short guide to how the stamp duty changes will affect you as a landlord, written by Karl Griggs, Director at CPC Finance.

This does not apply to land, commercial or semi commercial units, only residential purchases in personal or limited company.

The additional charge applies above the current “stamp duty land tax” rates. The below table illustrates how the changes will affect you:

For example, anyone buying a £250,000 second home or buy to let before April pays stamp duty of £2,500. This is based on paying zero per cent on the first £125,000 of the property value and 2 per cent on the portion between £125,001 and £250,000. But from April, landlords will have to pay 3 per cent for the first £125,000 and 5 per cent instead of 2 per cent on the amount between £125,001 and £250,000, meaning that they will have to pay £10,000 in total.


This clearly affects the buy-to-let market but there are further implications landlords should be aware of:

• Property owned globally will be relevant in determining whether a property purchased in England, Wales or Northern Ireland is an additional property.

This means that if someone is purchasing their first or only property in England, Wales or Northern Ireland, and they already own a property outside these areas, they may have to pay the higher stamp duty rate. This would apply to a foreign homeowner buying in Britain, a Briton with a holiday home, or someone who owns a Scottish property.

• It is not possible to ‘flip’ your home anymore - the Treasury is being strict on the definition of a main residence when it comes to the extra stamp duty charge.

If you buy a second property you will always have to pay the higher rate of stamp duty, even if you plan to live in it and rent out your old one, known as a let-to-buy.

For those landlords who want to complete their purchase of property before stamp duty comes into effect, time is of the essence. There are many landlords who are trying to complete their purchase before the deadline and this means that the buying process will be slower – valuers, lenders and solicitors will be busier, so completions will take longer to go through.

There is still time to source finance and complete on a property before April but the deadlines are tighter. It is therefore essential to start the process now, which is as follows:

• Source a property you want to purchase
• Apply to a lender or broker
• Instructing the valuation
• Commence the legal process with solicitors.

The changes in stamp duty will add costs to your property investment if you purchase after 1 April 2016. The team at CPC Finance will be able to assist in helping make sure your transaction is completed in the timeliest manner possible

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Latest Comments

MBM Homelets
MBM Homelets 23 Mar 2017

Although this is a very positive step, there is little or no guarantee of the standard of workmanship employed by the tenants. We have had experience of a professionally decorated property being ' painted'...

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ajay
ajay 21 Mar 2017

How is the "robust evidence" looking now?

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NathanG
NathanG 20 Mar 2017

I've been watching the series so far and am completely baffled by the cases that were presented. Though, I don't think that we can protect ourselves from every scam possible - it will just make the scammers...

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Landlady14
Landlady14 01 Mar 2017

You would think so Niraj Shah! My experience only proves that there are varying qualitiers of professional in all aspects of property letting. None of the ones I have dealt with, from letting agents to...

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Mark
Mark 01 Mar 2017

Thanks for this article. Hopefully one day everybody's lifestyle will be eco-sustainable.

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Ben Taylor
Ben Taylor 28 Feb 2017

I was convinced that London was the most expensive!

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Alan Read
Alan Read 28 Feb 2017

Australia are leading the way in this I think. The trouble with Britain is we don't get enough sun to make use of solar power.

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James Powell
James Powell 27 Feb 2017

This is a very good news.

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DanHumphreys
DanHumphreys 27 Feb 2017

It sounds like a good idea. Anything to help the younger generation get a foothold.

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Matt
Matt 20 Feb 2017

Is this fake news?

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Matthew Hollywood
Matthew Hollywood 07 Feb 2017

Matthew Hollywood - Director Mishon Mackay Land & New Homes - Brighton The shortage of New Homes is in part effected by the lack of land sales. Land sales are held back because there is a disparity between...

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CommercialTrust
CommercialTrust 30 Jan 2017

Hi Graham, Would be interesting to see the above figure calculated against an investment via a Lt Company /SPV structure and if the investor found themselves pushed in to the higher tax bracket. Mortgage...

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