Buying and selling your home News
02 February, 2016
In a move to help ease the housing shortage, George Osborne's recent Spending Review and Autumn statement has revealed that the rate of stamp duty for anyone buying additional properties, including second homes or buy-to-let properties, is to be increased from April 2016.
The amount of SDLT payable will see an increase of 3% applying to additional properties purchased for over £40,000.
Working out how much tax is to be paid will depend on the portion of the property falling into each band. Properties purchased as additional homes for up to £40,000 are exempt from stamp duty. Properties purchased as additional homes between £40,000.01 & £125,000 will be charged stamp duty on the full purchase price.
Up to £125,000
Standard Rate: 0
Second Home Rate: 3%
£125,001 - £250,000
Standard Rate: 2%
Second Home Rate: 5%
£250,001 - £925,000
Standard Rate: 5%
Second Home Rate: 8%
£925,001 - £1.5 million
Standard Rate: 10%
Second Home Rate: 13%
Above £1.5 million
Standard Rate: 12%
Second Home Rate: 15%
The standard rate will still apply if only one property is owned at the end of the transaction.
On these new rates, an individual buying a second home for £288,000, the average UK house price, would be faced with a tax bill of £13,040 on their additional property. This is a significant increase from the standard rate of SDLT, which would result in a bill of £4,400.
The higher rates will not apply to purchases of mobile homes, houseboats or caravans. However, all other second homes and buy to let properties will be considered to be additional properties.
The increase will apply to additional property purchases which complete on or after 1st April 2016.
If you are purchasing a property and exchanged contracts before the Autumn Statement on 25th November 2015, you will be exempt from the higher tax rate. Regardless of whether the transaction completes after April 2016.
If you have exchanged after the Autumn Statement, but complete later than April 1 you will be subject to the increased tax.
If you purchase a house after April 2016, without managing to sell your previous residence first, the higher rates will still apply. A refund will however be allowed where a purchaser disposes of a previous main residence within 18 months of the purchase.
If you are looking for any more information with regards to our services view our Residential Conveyancing section. You can also contact Michelle Thompson in our Residential Conveyancing department via email or phone on 01254 222349. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
Very professional and courteous staff. Our conveyancing was carried out with diligence and speed. Would highly recommend.
I have always recommended to you friends and associates in need of legal help, and I know that their opinion is as positive as mine.
Having recently sold my house Forbes handled this in a very professional manner with obvious expertise. My interests were always their first priority & I was kept informed at all times.