Stamp Duty increases buy-to-let
From 1 April 2016, individuals who purchase additional residential properties, second homes or buy-to-let properties will pay an additional 3 percentage points above the existing SDLT rates. The higher rates are:
- £0 – £125k: 3%
- £125k – £250K: 5%
- £250k – £925k: 8%
- £925k – £1.5m: 13%
- Over £1.5m: 15%
This will add a considerable on-cost for landlords and families that venture into multiple property acquisitions. Without this change, a residential property purchased for £250k would have had a SDLT charge of £2,500. Under the new rates this will increase to £10,000.
Properties purchased for under £40,000, caravans, mobile homes and houseboats will be excluded from the higher rates. Furthermore, small shares in recently inherited properties will not be considered when determining if the higher rates apply.
The budget also clarifies when companies making residential property purchases will be subject to this additional SDLT charge.
In the lead up to the budget it had been speculated that significant, incorporated property businesses would be able to avoid the increase. It would appear that this is not to be.
In the notes to the budget it is clearly stated:
“Companies purchasing residential property will be subject to the higher rates, including the first purchase of a residential property.”
Accordingly, setting up a new company for each property acquisition or transferring existing portfolios into corporate structures will not allow landlords to avoid the additional rates of SDLT on post April 2016 acquisitions.
Indirectly, these changes will also affect sellers of residential property as the SDLT increases may dissuade marginal buyers from purchasing. Will we see affected house prices falling?
- Green finance projects receive government backing - June 1, 2023
- Paying work-related expenses? Do not forget to claim - May 30, 2023
- The power of management accounting and cloud software for SMEs - May 25, 2023
- Rising cost of fuel and groceries fall under spotlight - May 23, 2023
- Government cash for industries to boost economy and cut emissions - May 18, 2023
- Millions of pounds saved as tide is turned on benefit fraudsters - May 16, 2023
- Tax change supports low-earning savers - May 11, 2023
- Restaurant and bar staff to benefit from new tipping law - May 9, 2023