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

Reply to the comment left by "Luke P" at "25/11/2015 - 14:44":

Apparently it's 3% up to £125k.

Can anyone who will be affected by the hike in stamp duty, contact Rosie Taylor at the Mail asap, as she is writing an article on it today? This is the email address:

rosie.taylor@dailymail.co.uk

Reply to the comment left by "Brian H" at "26/11/2015 - 13:25":

I've read the section in the "Blue book" on this and it is an additional 3% on top of the rate you would otherwise pay on properties bought for £40k or more.(i.e. less than £40k it is still 0%).

As this is a flat rate increase for properties over £40k the extra tax wil be 3% of the purchase price.

I think GO knows exactly what he is doing. He's playing a form of Robin Hood albeit he "appears" a bit of a confused RH. However, whichever way you slice & dice it, the coffers are dry & UK Plc is in dread no matter how much better we are doing compared to other Nations. House prices, especially in the South East & in particular; London/Greater London are out of reach for first time buyers. May be by taxing the private landlord (indirectly or directly by raising taxes or doing away with existing tax breaks) they'll push landlords to sell and in the meantime, all landlords will begin to put up rents to cover their reduction in profits (or tax on losses!) thus pushing tenants to want to buy vs rent. Also the Gov wants to encourage the institutional investors so he needs rental yields to be high. He's got to swell the coffers from somewhere yet keep voters & the U turn on tax credits is a bigger vote winner than taxing the private landlord (I personally think he planned to U Turn on tax credits from day one & used its introduction & withdrawal to advertise how much he cares about people which would otherwise have gone unnoticed had he never introduced this in the first place). In his shoes, what alternative would you suggest he tax? I'm not saying I like what he's done:-
- withdrawal of 10% W&T allowance (fair enough as this was a freebie for years)
- abolition of finance mortgage relief on the private BTL sector & only a 20% allowance in its place thus....
- more people will become HRT payers (or even additional taxpayers) resulting in more tax to HMRC, with many also possibly losing their child benefit or their personal allowance
- additional stamp duty on BTL purchases
- a shorter window in which to pay any CGT on disposal from 2019 hence he's saying - sell earlier please (fair enough) BUT....
- will the next call be to raise CGT as it is quite low at only 18% & 28%?
- then there's the fringe stuff going on eg local authorities being able to set up licencing schemes for all property types (waste of a good landlords hard earned cash which doesn't help catch rogue landlords any faster - but I suppose fair enough as LA's are desperately short of cash)
- passing on the burden of immigration checks under the "right to rent" to the landlord (I personally like to check out my tenants thoroughly any way)
- telling tenants in the prescribed "how to rent" checklist to only rent from an accredited landlord (fair enough)
- Universal credit whereby rents paid direct to the landlord will be paid with the qualifying amount of UC direct to the tenant to then pay their rent....
- which in turn will drive up the cost of Rent Guarantee Insurance from the few insurers that cover Housing Benefit tenants (& possibly RG policies for the PRS too as these same insurers will need to cross subsidize) all of which now Insurance Premium Tax at the increased rate of 9.5%
- then there's your Legionella Risk Assessment costs (albeit an ongoing debate of what's needed for single unit properties)
I could go on & on.
All in all, we have to be realistic & either:-
- accept & do nothing
- accept & just increase rents
- accept & refurbish to a standard that merits charging higher rents
- accept & escape the BTL sector
- accept & incorporate if applicable
- accept & plan accordingly on how to make up the reduction in profit over the medium/longer term
- accept & sell off X no of BTL's, proceeds of which will hopefully be sufficient to redeem the finance remaining on those BTL's retained or at least reduce the amount still owed so there is a neutral effect on one's tax position
- form a cooperative aka as a Mutual organization with the purpose of raising funds from its membership or customers (collectively called its members), which can then be used to provide common services
http://www.co-operative.coop/corporate/widermovement/
- fight the Gov individually or come together as one voice whilst carrying out one of or a mixture of the above.
We have a vast array of what we can do/plan to do individually to suit our own personal circumstances, but together we can achieve greater things. It's up to us.
At the end of this mayhem, those left standing will no doubt do well. I plan to be one of them & my plans (based on my personal circumstances, needs & wants that may not fit with others) were turned in to actions straight after the Summer Budget, much of which is still a plan in the making being tweaked, discussed, played around with daily/weekly but so far, so good.
I nevertheless would like to see a greater collective force of like minded landlords. This co-operative or whatever it's called, should also have an umbrella plan to fight for the greater good of its members & not just one like RLA or NLA who serve their purpose but are yet to pull together as a cohesive force.
I feel like I'm babbling now, so will bow out gracefully. Hopefully though a few of you will get my drift in that we are all small acorns but together we can hopefully become a big oak tree that then grows in to a bl**dy big forest that is then too important to ignore & should be protected, or at the very least, by coming together formally, we can save time & money.

Reply to the comment left by "Laura Delow" at "26/11/2015 - 15:37":

Good write up Laura.

Am I right in assuming that despite the hike, the new SDLT fee will still be deductible in full against CGT when a property is sold?

Reply to the comment left by "Paul Mathur" at "26/11/2015 - 17:53":

I'm no expert but I would say Yes it would be allowed.
When calculating any CGT liability (not just with property) the costs of aquisition and disposal are allowable expenses.

Reply to the comment left by "money manager" at "26/11/2015 - 12:56":

Thanks for your thoughts. Certainly seems confusing, not a 1st home or a 2nd house either, would they consider it a 1 and a 1/2 home then? I guess we need to wait for the details of implementation. Corporation tax is something I would already pay on any gains.

PAUL You will not get the full SDLT back on a sale.Only 18% or 28% according to which tax band you fall in the tax year you sell.Unless GO increases CGT to 100% of course then you will get all the SDLT back but nothing else !!!

Reply to the comment left by "ray selley" at "26/11/2015 - 21:01":

Yes indeed, the full enhanced amount of SDLT will be allowable as an acquisition expense and thus deductable from your profit BUT as Ray rightly points out, all this means is that you only save 18% or 28% on the amount of extra SDLT which you paid when you purchased the property.
You still lose and GO still wins!