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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

ChristinaReedUK
ChristinaReedUK 20 Jun 2016

I don't understand why it's always a war between the two sides. Either, way the landlord is probably keeping a detailed inventory and will see the changes you've made. I just don't understand why there...

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NathanGreen
NathanGreen 16 Jun 2016

Seeing that the tenants are quite satisfied with their landlords and the properties is indeed great. I wonder, though, what is the situation in London alone? The tenants face sky-high rent levels in the...

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AndiMur
AndiMur 15 Jun 2016

TheGuardian published the same forecast. But on the other hand, professional brokers express different opinions. According totranio.com, an exit from the EU would not affect the demand/supply imbalance...

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Gary Holmes
Gary Holmes 14 Jun 2016

Having a professionally completed inventory at check-in and check-out is clearly (to me at least) of minor value. Tenants make un-authorised modifications and/or walk off with items that belong to the

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Violet Gibson
Violet Gibson 14 Jun 2016

Cautious people think buying off-plan is reckless, but over the past few years investors have literally made fortunes.Pre-release prices have obvious benefits for the developer, who gets instant finance...

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Kate Windleton
Kate Windleton 14 Jun 2016

An interesting research indeed. I guess that is in complete contrast with the United States where people often move from one coast to another. It will be interesting to hear the trends for people moving...

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NathanGreen
NathanGreen 14 Jun 2016

I think it all depends on the market conditions and how well your company is doing. You will agree that you can't demand more when you're killing yourself just to hang in there. Sometimes you need all

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ChristinaReedUK
ChristinaReedUK 13 Jun 2016

What does "detecting a bad vibe" mean actually. I've had certain vibes like these and yet have always found a reason , if there's any, why I don't like a certain property. The property maintenance might...

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keybanks estates
keybanks estates 08 Jun 2016

Great News for first time buyers, about time two!

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NathanGreen
NathanGreen 07 Jun 2016

I agree with #6 - you should maintain your garden according to the target buyer. One thing is universal, though - cleanliness and order. Having the yard clutter-free and clean will help people who do enjoy...

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NathanGreen
NathanGreen 06 Jun 2016

I will always say that London is overrated. Sure it is the capital, but it's too stuffed in there. It's more of a business city to me.

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Paul
Paul 25 May 2016

Estate agents are pathetic when it comes to fees. They have this 'I had to do it at 1% because that's what the others were quoting' mentality. We are the most expensive agents in our area, charging double...

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