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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

Tony Gimple
Tony Gimple 09 Dec 2017

Linking professionalism to limited company borrowing is a flawed concept. Despite S24 etc., limited companies are the most tax inefficient way of running a property business and leave borrowers seriously...

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

It's normal. If you plan to buy a house in one of the most beautiful spots in the country you should pay a high price.

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

I think that the situation will be the same at December.

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Scott Garnet
Scott Garnet 06 Nov 2017

If you have a patio or a porch it is important to make sure that any connecting doors are secured. Good advice for sliding glass doors is replacing the panels with storm resistant glass and getting heavier...

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richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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