14:30 PM, 25th November 2015, About 10 years ago 224
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The Chancellor George Osborne in his spending review today announced that he will increase Stamp duty for Buy to Let properties and second homes with a surcharge of 3% from April 2016.
The Chancellor said he wanted to change from generation rent to generation buy. He was concerned that Cash Purchasers and foreign investors, who were not affected by the relief cap of 20% on mortgage interest, along with Buy to Let investors were squeezing out home buyers. Therefore there will be an increase of 3% in stamp duty for non-main residence purchasers, which would also raise an additional £1bn in tax.
The Housing budget will now be doubled to £2bn per annum and a project to build 400,000 new affordable homes to buy will be started. Osborne said “this government chooses to build.”
These affordable homes will be offered to First Time Buyers at a discount of 20%, and 135,000 new homes will be offered under Help to Buy shared ownership.
A London Help to Buy scheme will offer interest-free loans up to a maximum of 40% of the value of a newly built home.
Restrictions on shared ownership will be removed and the planning system reformed to deliver more homes.
Councils will also receive an additional £10m to help homeless people.
It is the Chancellors clear policy to help solve the housing crises by building more homes and squeezing the competitiveness of the Private Rental Sector thus shifting the balance from renting to home ownership.
Commercial property investors, with more than 15 properties, are expected to be exempt from the new charges.
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Landlord tax changes will lead to rent increases - survey says
steve p
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Member Since September 2015 - Comments: 153
0:42 AM, 1st December 2015, About 10 years ago
There is some good info here:
http://paullewismoney.blogspot.co.uk/2015/11/stamping-on-additional-homes.html
Seems you will get caught out if you want to rent out your old property and buy a new one… You must pay the higher SDLT and claim it back if you sell the previous property within 18months… Will be interesting to see what they do with Ltd companies as there could be a loophole if you buy a new property for say £350k and your old house is £200k, after purchasing the new house you could sell the old house to a ltd company, here are the sums
new house:
SDLT1 SDLT2 Difference
£5000 £14000 £9000
old house:
SDLT1 SDLT2 Difference
£1500 £7500 £6000
scenario one, just buy new house and let out old house SDLT = £14000
scenario two, buy new house and sell old house to ltd company (ltd company not having to pay higher rate SDLT), SDLT = £6500
scenario three, buy new house and sell old house to ltd company (ltd company has to pay higher rate SDLT), SDLT = £12500
Either way in this scenario which im looking more at myself in the future could be worth doing, I currently have my BTL’s in personal but the advantage of the above is I would save money on SDLT and I could then mortgage and claim interest relief at full amount.
steve p
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Member Since September 2015 - Comments: 153
1:10 AM, 1st December 2015, About 10 years ago
Even better idea,
Buy a house under £40k, on one day, this incurs no SDLT, then the next day you buy your £350k house or however much it is, you will be liable for the higher rate of SDLT, but you then sell your £40k property and claim back the higher SDLT and you have totally avoided paying the higher rate of tax.
Not sure what HMRC would think of this but there could be a business opportunity where you buy a house for under £40k then offer to sell it to someone and then buy it back the next day, for a fee of course…. This could be seen as aggressive tax avoidance though. I think the other idea of selling original property to company might have more legs though.
Laura Delow
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Member Since April 2014 - Comments: 306
7:53 AM, 1st December 2015, About 10 years ago
Reply to the comment left by “steve p” at “01/12/2015 – 00:42“:
At present it seems Ltd Cos owning less than 15 properties also have to pay the additional 3% SDLT on your main residence being sold to the ltd co & on moving forward you lose Private Residence Relief & Letting Relief vis a vis CGT.
What’s worse is the lack of clarity if you own 3 BTL’s & then sell your current residence to buy another to live in, which seems will be treated as a 4th purchase & if this is the case, you’d end up paying 3% extra SDLT on buying your new home. This can’t be fair surely. A simple solution is for the government to say any buy-to-lets you already owned or exchanged to buy before 25 November 2015 will be ignored in assessing whether you’ve got existing properties.
Barry Fitzpatrick
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Member Since October 2014 - Comments: 274
9:14 AM, 1st December 2015, About 10 years ago
@Laura
A very good point. I’ve just fired off the following email to my MP. Can I suggest everyone else does the same
Hi Andrew,
Could you get clarification please on a point on the new SDLT on BTL/second homes?
As you know I have five BTL properties which I rent to students. If I decide to move home, (my Principle Private Residence, PPR), will the higher rate of SDLT be payable on the purchase of my new home (which will become my new PPR)?
Can you propose an amendment to the wording such that the additional tax is only payable if I increase the number of properties that I own (if that takes the total to 2 or more)? This is always presuming that the Chancellor is not intending to sting private Landlords further with this tax.
Best regards
S.E. Landlord
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Member Since July 2015 - Comments: 154
10:04 AM, 1st December 2015, About 10 years ago
I would expect providing you are selling your existing home then the additional stamp duty not to be payable. If you wish to keep your existing home as a let to buy then probably the additional stamp duty will be due on either the new property or the one that is being let.
steve p
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Member Since September 2015 - Comments: 153
10:35 AM, 1st December 2015, About 10 years ago
Reply to the comment left by “Laura Delow” at “01/12/2015 – 07:53“:
Thats a very good point Laura, although I would hope as long as you sell your previous property you should not have to pay this higher rate, but this tax could get oh so very complicated as if what Barry wants is put in place there is potential to buy a really cheap property, then when you want to move house, buy the new house and sell the really cheap property, thus avoiding the new tax.
The devil will be in the detail im sure. But they aren’t half making a dogs breakfast of it all. Interesting to see what affect this has as it will hit the south and SE especially hard, just where the need is greatest, can definitely see rents spiraling up towards the end of next year, if not before.
Seething Landlord
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Member Since August 2013 - Comments: 428
13:02 PM, 1st December 2015, About 10 years ago
Reply to the comment left by “Barry Fitzpatrick” at “01/12/2015 – 09:14“:
The position regarding the house you live in and what happens if you want to move and buy a replacement is covered in Paul Lewis’ blog at
http://paullewismoney.blogspot.co.uk/2015/11/stamping-on-additional-homes.html
as mentioned by steve p
Laura Delow
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Member Since April 2014 - Comments: 306
13:13 PM, 1st December 2015, About 10 years ago
Reply to the comment left by “Seething Landlord” at “01/12/2015 – 13:02“:
Thanks SL. Very interesting blog & useful clarity
steve p
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14:27 PM, 1st December 2015, About 10 years ago
My girlfriend has an interesting situation, she still owns a house with her ex that her ex lives in while she rents and he is looking to buy her out but because of being made redundant and being a bit of a fool its taken a while…
She has another property in London that she rents out, if she sells the remaining half to her ex then say 6 months later buys a new place, after April 2016 looks like she may get stung by the higher rate of SDLT unless the 18 month rule applies forward as well as backwards.
Jon Pipllman
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Member Since August 2015 - Comments: 287
15:15 PM, 1st December 2015, About 10 years ago
Hot on the heels of the Autumn Statement is the BOE Financial Stability report, published today
The specific section on UK property only takes a few minutes to read and that is probably time well spent to understand what the BOE thinks about housing, BTL and commercial property
Here is a link to the that section of the report
http://www.bankofengland.co.uk/publications/Documents/fsr/2015/dec.pdf#page=31