Stamp Duty revenue increase to be used in areas with highest numbers of second homes

by Property 118

10:15 AM, 23rd December 2016
About 2 years ago

Stamp Duty revenue increase to be used in areas with highest numbers of second homes

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Stamp Duty revenue increase to be used in areas with highest numbers of second homes

Stamp Duty Land Tax (SDLT) revenue has increased by 12% to £7.7bn for the first eight months of the 2016-17 financial year compared to the previous year despite a 9.9% decrease in the number of property sales.stamp dlt

Purchase transactions for this period April to November 2016 fell from 868,000 last year to 782,000 this year.

The increase in tax revenue is due in part to continued rising house prices, 12% on top slice on homes worth more than £1.5m and the 3% surcharge of Stamp Duty on second homes.

40% of SDLT income comes from inside the M25, but with the number of London transactions falling this could put a dent in projected income raised for the Treasury in the near future.

The Government has announced it will introduce an annual £60m fund for areas of England with the highest levels of second home ownership that is perceived to push the price of homes up.

The fund is to be used by councils to provide “affordable” homes for first time buyers over the next five years. However, with 150 councils targeted it does rather seem a drop in the Ocean.

Housing Minister, Gavin Barwell, said “the high number of second homes can be a frustration for many who struggle to find an affordable home in their community. This new fund will help tackle that by boosting supply and making sure community groups are at the heart of delivering new homes, so that this is a country that works for everyone.”

For the first year the funds will be used to improve skills and reviewing housing needs in different areas and must then be used to deliver housing on the ground for local people during the second year.

In other words don’t hold your breath!



Comments

terry sullivan

11:27 AM, 23rd December 2016
About 2 years ago

and the first years money will be blown on bureaucracy

and 60 million is peanuts

and define affordable?

Adrian Jones

11:36 AM, 23rd December 2016
About 2 years ago

My son has two flats in London which he rents out. He is looking to sell one (he lived there 5 years) and buy another one to live in.

There seems to be conflicting advice (from solicitors and a mortgage broker) as to whether he will be liable for higher rate stamp duty as he would still have one flat rented.

Anyone else had any experience of this - grateful for advice.

Neil Patterson

12:06 PM, 23rd December 2016
About 2 years ago

If the property being sold is currently his main residence and the one purchased will be his main residence then it will be normal stamp duty without the surcharge.

Adrian Jones

12:13 PM, 23rd December 2016
About 2 years ago

Reply to the comment left by "Neil Patterson" at "23/12/2016 - 12:06":

Thanks Neil. I think that's where the confusion and differing advice comes from.

He lived in the property he is selling for 5 years from the time he bought it. When he sells in the Spring it will have been rented out for 18 months.

At the moment he is renting a room at a friend's house.

Gunga Din

18:48 PM, 23rd December 2016
About 2 years ago

He owns two flats and will sell one, so the next flat will still be a second property. Surely he would pay the increased SDLT on that basis?

Anthony Endsor

19:14 PM, 23rd December 2016
About 2 years ago

The way I understand it, the surcharge is payable on second properties only if another property isn't sold or if the bought property is not to be used as a main residence.
I would think in this instance, as a property is being sold, a residential ONLY property bought within a few months of the sale of the other property would only attract standard duty.
This however would not apply if the new property was also to be let out.

Gunga Din

20:45 PM, 23rd December 2016
About 2 years ago

Yes, based on your explanation I agree with you Mr Endsor. I'll wind my neck in.......

I'll have to have another look at that flow chart.

Simon Hall

10:48 AM, 24th December 2016
About 2 years ago

I agree with Anthony. The extra surcharge is not payable unless you are buying BTL investment property. If you are disposing off your Residential Property and buying a Residential property to live in then you are exempt from 3% surcharge this is regardless of the fact how many investment properties you have in your portfolio.

Adrian, it is worth noting that, even if your son does not sell his existing residential flat, he can still go ahead but on the new place he would need to pay extra 3% in which case, he will be given further 36 months in which time he can sell his previous main residence and receive refund on "Extra Surcharge Of 3%.

If he takes longer than 36 months to sell from the purchase date of new property then he will lose his right for refund.

Adrian Jones

11:01 AM, 24th December 2016
About 2 years ago

Reply to the comment left by "Simon Hall" at "24/12/2016 - 10:48":

Thanks Simon (and Anthony and Gunga). The point is he is not selling his residential property, both flats he owns are rented.

As I said he lived in the one he is selling for 5 years and by the time he sells it the property will have rented for about 18 months.

The difference in the rate of stamp duty he pays could be about £12k.


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