Spending Review 2015 – 3% increase on Stamp Duty for BTL and second homes
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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10:26 AM, 20th February 2016, About 10 years ago
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Member Since December 2013 - Comments: 61
6:38 PM, 29th February 2016, About 10 years ago
I wonder if anyone could advise on an issue arising from the 3% extra stamp duty from 1st April. Do you think it would apply in the following scenario?:
– We have a main residence and BTL properties.
– We are looking to move from our main residence.
– We rent out our main residence, so it becomes a BTL, on a BTL mortgage, ie no longer and never again a main residence, so we have no main residence.
– We live in rented accommodation for a time.
– At some point in the future we buy a main residence. Our only main residence.
– Will the additonal 3% apply in this case?
Grateful for your advice.
Kevin Thomson
Member Since February 2011 - Comments: 3453 - Articles: 286
6:49 PM, 29th February 2016, About 10 years ago
Hi Kevin,
Currently you would pay the extra 3% unless you sell your original main residence within 18 months and then you would get a refund.
Member Since December 2013 - Comments: 61
8:07 PM, 29th February 2016, About 10 years ago
Thanks Neil.
But I was just thinking that if I didn’t own a main residence then my first main residence would be free from this tax. Obviously not.
oh well…
Member Since July 2013 - Comments: 1434
8:17 PM, 29th February 2016, About 10 years ago
Reply to the comment left by “Kevin Thomson” at “29/02/2016 – 20:07“:
If you buy a main residence and you already own a property, then you pay the extra 3%.
Member Since December 2013 - Comments: 61
11:33 AM, 1st March 2016, About 10 years ago
and a further question….
I’d prefer to add my current main residence to the BTL portfolio, so was contemplating moving to a less profitable BTL, claiming that as the main residence and selling this less profitable one when buying the new main residence.
Is there any time period of residence required in this scenario, eg if moving into the BTL only weeks or days beforehand? I’m not looking to qualify for any capital gains relief so that’s not an issue.
thanks again for any advice you’re able to offer. Fantastic website. I’m part of a couple of the campaigns.
Member Since February 2011 - Comments: 3453 - Articles: 286
12:50 PM, 1st March 2016, About 10 years ago
Good question, but I think that will be in the detail yet to come.