News
Buy-to-Let landlords hit with 3% stamp duty charge
Thursday 14th January 2016
From 1st April this year, buy-to-let landlords will be expected to pay 3% stamp duty on purchases of additional residential properties over £40,000. This is in addition to the standard SDLT charges.
So what does this mean exactly?
If you're looking to purchase an additional home for the purposes of renting i.e. buy-to-let, then you'll be faced with paying an additional 3% stamp duty tax on top of the standard rate. For example, if you're buying a house for £200,000 before 1st April you will only pay SDLT of £1,500. That is based on paying zero percent for the first £125,000 and 2% on the remaining value between £125,001 and £250,000.
But after April, the same property will end up costing you £7,500 due to the additional 3% on the first £125,000 and a total of 5% on the amount between £125,001 and £250,000. Quite a difference.
The reason for this change, according to Chancellor George Osborne, is to free up housing for first time buyers and provide funding to communities in England where the impact of second homes is particularly acute. But it's not all go just yet, the Treasury has a consultation on the proposed reforms that closes on 1st February 2016 with the policy being outlined at the 2016 Budget in March.
If you're not sure whether this will apply to you or not, take a look at the handy diagram below and simply answer the questions.
There are some exclusions to the change including the purchase of caravans, mobile homes or houseboats, or to corporate making significant investments in residential property. The government is also seeking views on whether individuals who own more than 15 properties should be exempt from the extra charge.
