Amanda Holden, Head of our Residential team discusses the proposed higher rates of Stamp Duty Land Tax (SDLT) for individuals who owns two or more residential properties.
A consultation on the proposal to introduce a higher rate of Stamp Duty Land Tax payable on purchases of additional properties is currently being undertaken by the government. The consultation closes on 1 February 2016 and the final policy design will be announced as part of the Budget on 16 March 2016. The higher rates will be 3% above the current SDLT residential rates which were reformed radically in the Autumn Statement 2014. In 2014 a system was created whereby each new SDLT rate is payable on the portion of the value of the property which falls within each band rather than the whole amount being subject to the SDLT rate the price fell within.
The proposed higher rates will apply to most purchases of additional residential properties when an individual owns 2 or more residential properties and they are not replacing their main residence.
This change will have a huge impact on the buy to let market and those looking to buy a second home. The consultation states that the government is committed to supporting home ownership and first time buyers. Owning 2 or more properties has a consequence for first time buyers being able to get themselves on to the property ladder as it reduces the supply of housing stock available to buy.
‘It remains to be seen whether those able to do so will continue to buy property for investment purposes as the higher rate may have too big an effect on the profitability of the deal.’
For further information and a conveyancing estimate please contact Amanda Holden at The Wilkes Partnership Stanton House 54 Stratford Road Shirley Solihull B90 3LS on 0121 733 8000 or firstname.lastname@example.org.