As the 31st of March dawned many people purchasing second homes, whether they were buy to lets or not, were faced with the prospect that it was now or never for their purchase. Had they not have completed on or before the 31st then the new, higher, Stamp Duty Land Tax rates for individuals purchasing second homes would apply, thereby creating an increased bill on completion:
£200,000.00 Single Property: £200,000.00 Second Property:
£1,500.00 Stamp Duty Land Tax: £7,500.00 Stamp Duty Land Tax
The most common scenario in which the higher rates apply is when an individual is purchasing a second home with the intention of letting it out, in addition to their main residence. It is also immaterial whether or not you intend to rent out your second property, the principal being you do not pay the new rates if you only own one property.
For example, if X is currently in rented accommodation but purchases a property in order to let it, he will not be liable for the new rates, because at the end of the day he only owns one property, if X purchases two buy to lets whilst still living in rented accommodation however, the new rates will apply to the second property.
Main Residence Clause
If Y owned both a main residence and a second home, and sells her main residence and purchases a new one, although she now has two properties, she has replaced her main residence and is therefore not liable for the new rates.
If however Y owned a main residence and purchased a new main residence but did not sell the former and let it out, she then has two properties, and not replacing her main residence would leave her liable to pay the new rates.
3 Years Clause & Refund
If however G sold a property which was his main residence, but still owned a property he lets out, and is now living in rented accommodation because of a delay with his purchase or because he hasn’t decided where to buy, providing the property he is purchasing will replace his main residence and it completes within 3 years of the sale of his old property, the higher rates will not apply, and a refund may be given.
The policy also considers when contracts were exchanged, providing this happened before the 25th November 2015. If S already owning a property, purchases a buy to let and exchanged contracts on the 24th November 2015, it is immaterial when he completes. The new rates will not apply if someone purchasing a second home which is not replacing their main residence exchanges contracts before the 25th November.
There are many other scenarios that also pose the question as to whether or not the new rates will apply. For assistance on this and any other property related legal matter contact Thursfields Property Department on 01905 730450.