Last Friday saw the introduction of an additional 3% Stamp Duty for anyone owning more than one home – even if this is because they are in the process of selling their property in order to buy another.
Auction House London auctioneer Andrew Binstock said: “The latest tax is a punishing blow for those following the traditional estate agency route to market. The 3% hike in Stamp Duty will kick-in as soon as anyone owns more than one property. This will include people who are still trying to sell their existing home, but buy their new home in order not to lose it. In effect, they will be treated like any other second- home owner or buy-to-let investor.”
The new regulations indicate that the additional Stamp Duty can be claimed back if the first property is sold within 36 months. However, in practice, Andrew Binstock says that solicitors will be duty-bound to warn their clients about the tax implications of owning more than one property – especially if their original home fails to sell within that time.
He explained: “Previously, people were willing to own two homes simultaneously for a short time, if it prevented the chain in which they were involved from falling apart. The danger is, of course, that if their original home is still on the market after three years, they won’t be able to recover the extra Stamp Duty. This will inevitably lead to delays and fall-throughs in the estate agency process. As a result, more sellers are likely to choose the speed and certainty of auction instead.
Auction sellers understand that the fall of the hammer constitutes a legally binding contract, with a completion date usually set for 28 days after the sale. The process is quick and transparent – with the benefit of the competitive auction bidding environment meaning that many properties sell for higher prices than they were on the market for through private treaty.”
