On November 25th, the Chancellor announced new changes to the Spending Review and Autumn Statement which revealed additional rates of SDLT that will apply to acquisitions of additional residential property with effect from 1 April 2016.
The significant changes mean the SDLT payable on a typical £275,000.00 buy to let home or second home would rise from £3,750 to £12,000.
Under the current stamp duty rules, which changed in December 2014, a home buyer now pays different rates for different proportions of the property price. The reforms have given a more progressive approach where buyers are only liable for the portion of a property’s value which lies within the relevant tax band.
Under the new changes, if the total price for an additional ( buy to let) home exceeds £40,000, the entire consideration will be subject to SDLT at the following rates:
- 3%: £0 – £125,000.
- 5%: over £125,000 – £250,000.
- 8%: over £250,000 – £925,000.
- 13%: over £925,000 – £1.5 million.
- 15%: over £1.5 million.
Head of Residential Property Tony Gibb comments “the new year is likely to see a surge in buy-to-let properties on the market ahead of the new changes next April. Landlords may even charge more rent to offset the increase in taxes should they sell in future. The changes could mean, post April 2016, fewer landlords bringing their property to market and a consequent lack of supply”.
The higher rates will not apply to purchases of caravans, mobile homes or house boats, or to corporate entities making significant investments in residential property.
The law society confirms that the changes will apply to all completions that take place on or after 1st April but contracts entered into on or before 26th November 2015, with a completion after the 1st April 2016,will not be subject to the new rates.
To discuss how the changes in SDLT are likely to affect you, or to find out more about our fixed fee conveyancing quotes ahead of the changes, contact our property teams on:
Kidderminster- 01562 820575
Worcester -01905 730450
Halesowen- 0121 227 3850
Sedgley- 01902 904060
Stourport- 01299 827517