Spending Review 2015 – 3% increase on Stamp Duty for BTL and second homes

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "29/12/2015 - 10:44":

4 yes, but I your dreams!

Gov is intent on buying votes by encouraging FTBs. Overt political hidden agenda.

Regardless that many tenants can't hope to buy, or for good reasons may not want to. My good Polish tenants don't intend to be here long enough to warrant buying, others have Prepayment meters as they don't have a bank account. Micawber knew if (living wage) income gave enough to rent satisfactorily, why mortgage themselves for years to come?

Folk that had a house repossessed and lost their deposit, might well feel 'never again'.

If FTBs are enfranchised, non FTBs are very substantially disenfranchised. = less property, less choice of type, availability, area of choice, less competition etc etc. And MUCH higher rents, so far as the market can stand, and some more, due to supply/demand.

Needing 240,000 homes per year, and building 100,000, house prices certainly are unlikely to go down with all his pernicious machinations.

But read 2.19 and it us blatant flat out to get individuals out if renting to make way for their new Tory voters, see text below.

SDLT form part of the government’s overall housing strategy including support for home ownership. The higher rates of SDLT are therefore intended to apply to the vast majority of circumstances where individuals or companies and other non-natural persons purchase additional properties, which can impact on other people’s ability to get on the housing ladder.

However the government is aware that some purchases of additional properties can positively contribute to an overall increase in housing supply and support the government’s wider housing strategy, helping to facilitate the development and quality of the housing stock across tenure types.

Given the potential positive impacts some significant developments can have, an exemption from the higher rates of SDLT targeted at some forms of investment in property may be justified.

In designing any exemption a careful balance needs to be struck to ensure that the higher rates of SDLT support home ownership and first time buyers, and do not discourage those significant investments in residential property.

These developments may be new-build, converted buildings or renovation and conservation projects. Significant investments may also be made via the bulk purchase of existing housing stock, freeing up finance for developers to undertake other projects and providing greater certainty to developers.

Where these developments involve the bulk purchase of multiple completed units multiple dwellings relief (MDR) is available.

The development certainty and diversity of finance which may be provided by very large investors may be less likely to come from individuals or smaller companies and institutions. Small scale individual landlords, for example, may be more likely to purchase individual properties sequentially from the existing housing stock, directly competing against first time buyers for properties.

methods of designing an exemption focused on significant
Where individual landlords do purchase individual units off-plan in new developments, they may be less likely to achieve the scale of investment needed to provide certainty or security to a development.

The government wants to ensure that any exemption is narrowly targeted to apply only to those purchases of additional properties which significantly contribute to new housing supply and the government’s wider housing objectives.

The Autumn Statement indicated the government’s initial view was that any exemption from the higher rates would only apply to corporates and funds (such as companies, and pension and collective investment schemes) who have an existing residential property portfolio of at least 15 properties at the time of a transaction.

Since then, the government has considered that there may be circumstances where significant investment by individual purchasers may positively contribute to development and the government’s housing objectives in the same way as investment by corporate purchasers, and so there may be circumstances in which it is justified to exempt purchases made by individuals from the higher rates.

There are also a number of alternative methods of designing an exemption focused on significant investment and the increase in overall housing supply which may be more targeted than by designing an exemption by reference to the purchaser’s existing property portfolio.

For example, it may be more appropriate to target an exemption based on the bulk purchase of at least 15 residential properties, on the basis that bulk purchases are more likely to provide significant sources of finance and development certainty to a project.

Given this, the government would be interested in respondent views on whether an exemption from the higher rates which was instead targeted at the bulk purchase of at least 15 residential properties in one transaction would be a better approach, and whether there is evidence to suggest that this exemption should be available to individual investors as well as non-natural persons.

Seems to me that the whole idea is peppered with holes...

Its definitely worth having a cheap property in your portfolio that you can flip to be your main residence while the purchase of your actual expensive BTL or new home goes through, then move into your new BTL or home, sell the cheap property that was your main residence and then either move back to your original main residence or less suspiciously stay in that property.

I do think its a bit unfair though that you could buy a cheap property to live in, then want to buy a more expensive property to live in but keep your old cheap one as a BTL and you have to pay the extra on the expensive property, surely the cheaper one is your second home so you should pay the extra stamp duty on that one not the new expensive one?

NO SDLT TO PAY !

Not for everyone ....but if you have a disabled family member for eg or any other scenario that allows formation of a charitable status ..maybe.. it could be worth considering setting up a reg charity or charitable trust with 'them' as benificiary .....

Do charities have to pay tax on property deals?
Fortunately, charities are exempt from stamp duty land tax (SDLT). However, even though no tax may be payable, if the transaction is over the current tax threshold (for example, a long lease at a market rent), trustees may still be required to give notice of the transaction to HM Revenue and Customs by submitting a completed SDLT tax return. Generally, a return is not required for short-term leases at low rents as they fall below the current tax threshold.

http://www.theguardian.com/society/2010/jan/05/charities-qa-property

also

http://www.hmrc.gov.uk/manuals/sdltmanual/sdltm26005.htm

I want to buy a property to live in and rent out my old home, will I have to pay extra stamp duty from April?

http://www.dailymail.co.uk/money/experts/article-3383918/I-m-buying-flat-renting-old-one-stamp-duty-pay.html

This is money web site confirms a rumour I heard the other day that second properties not only need to be "completed" before 1st April 2016 but they need to be on the land registry by 4th April 2016 .
It takes several weeks after completion to do this !

Reply to the comment left by "steve p" at "30/12/2015 - 00:05":

Prinipal residence, the flipping of which has long been favoured by expense claiming members of the House, is under proposal to be decided at the disgression of HMRC.

Just for a different angle on the possible effects of the 3% stamp duty hike and also a little glimpse at the international picture:

'A recent article by Kate Palmer in the UK’s Daily Telegraph reveals that Spanish property is some of the most undervalued in the developed world, and could benefit from renewed British interest when stamp duty goes up on second homes in the UK.

“Dreaming of a holiday home in the sun?” asks Palmer. “If buying a holiday home overseas was not already an inviting proposition, it will become even more attractive from April when second properties bought in this country will attract a higher rate of stamp duty.”

Furthermore, “whatever your views on the British housing market, the evidence suggests the biggest bargains are overseas,” she says. “New analysis points towards southern and eastern Europe as offering the cheapest property – including popular holiday home markets of Italy, Portugal and Spain.”

Palmer digs into data from a decade-worth of research by the OECD measuring house prices in relation to local incomes, showing Spain as one of the most undervalued housing markets in the developed world with a price/income ratio of 74, compared to 116 in Germany and 107 in the UK. A ratio of below 100 suggests that housing is undervalued in relation to income, and overvalued if above 100.

But undervaluation doesn’t necessarily mean prices will rise soon, explains Palmer. Oversupply in Spain will keep a lid on prices for now. “Property in Spain, for example, which the OECD regards as undervalued by 26pc, grew just 1.2pc in the past year largely due to oversupply in the property market.”

Investors looking to take advantage of the undervaluation in Spain should focus on consolidated urban areas, the article suggests. Lifestyle buyers, on the other hand, are free to consider other areas, but “purely as a holiday home and not an investment” as returns could be disappointing.

Consolidated cities like Barcelona should offer investors the best returns, and also attract lifestyle buyers looking for an urban resort with great beaches.

Foreign investors may also find it easy to leverage up in Spain as major banks “still have properties on their books which they are eager to offload,” and the LTVs they are prepared to make suggest there are still bargains to be had, says Palmer. “Some banks are offering foreign buyers mortgages of up to 113pc of the purchase price – suggesting such properties are being sold at rock-bottom valuations.”
(written by Mark Stucklin)

+ Read the original article: Place in the sun? Where to invest in undervalued property in 2016

Is this whole stamp duty tax not an infringement of our human rights as investors.

If a property is for sale then anyone at present can put their offer in and see who the seller chooses to buy their home.
So why should investors in second homes be penalized with added tax ?

This extra tax wont be used on new affordable homes as stated .
The government sold off there housing stock and continue to do so at discounted prices with rite to buy schemes and spent all the profits .
The councils will be stumping up millions to house tenants in hotels and bed and breakfast that have been evicted due to his ill thought out plan to victimize landlords and investors alike.

It was a fair system for all until Osborne took his ball back like a silly child !!

Reply to the comment left by "Ros ." at "16/01/2016 - 09:35":

My son has just purchased a three bedroomed house with swimming pool in a delightful rural area of Southern Spain for €40,000. Originally on the market for €160,000, he made a silly offer which was accepted. It does help that he speaks adequate Spanish.

It is his intention to live all winter in Spain and continue with his internet based UK job.