PROPOSED STAMP DUTY CHANGES TO SECOND HOMES
Chancellor George Osborne announced in his Autumn Statement more changes to stamp duty payments – this time targeting those buying second homes or buy to let properties. Mr Osborne advises that from 1 April 2016 those wishing to buy an additional residential property such as a buy to let investment or a second home would have to pay a 3% surcharge on each stamp duty band.
At present, taking the first three stamp duty bands for residential property, the charges are currently zero on the first £125,000 of a purchase price (so if you are buying below this price then there is nothing to pay), 2% on the additional price between £125,000 to £250,000 and 5% on the additional price between £250,000 and £925,000. Therefore, if at the moment you are buying a second home or buy to let property valued at £200,000, the stamp duty would be £1,500 – i.e. nothing payable on the first £125,000 then £1,500 payable on the £75,000 price between £125,000 and £200,000.
From 1 April 2016, stamp duty will be payable at 3% for the first £125,000 followed by 5% and then 8% for the following band. Therefore, in our above example, a buy to let house costing £200,000 would, from 1 April 2016, attract stamp duty of £7,500 rather than the £1,500 currently payable.
Although the exact details are still to be confirmed, from the current information if you are intending to purchase a second home or buy to let property soon you could save thousands of pounds on stamp duty if you complete the purchase prior to 1 April 2016 so it may worth putting things in place for this as soon as possible.
Representatives at our Penrith and Appleby offices are happy to assist with any conveyancing transactions.