You may have heard on the grapevine that changes are coming this April which will change the Stamp Duty rates payable.
This will affect you if you are buying a second home or a buy-to-let property over £40,000.
The higher rates will be 3% above the current SDLT rates for residential property as follows:-
Property value band
SDLT rate for additional homes from April 2016
£0 to £125,000
Over £125,000 to £250,000
Over £250,000 to £925,000
Over £925,000 to £1.5 million
Over £1.5 million
This means that a property at £125,000 which would current attract no stamp duty will suddenly jump to a tax of £3,750.
According to the Halifax, the average house price in the UK is now at £208,286. Under the present regime, this would attract a stamp duty payment of £1,666 but as from April 2016 if you will not be living in the property this would jump to £7,914.
Questions we are being asked by clients that may be of use to you are the following:-
- We’re married/in a civil partnership – can we own more than one property between us without paying higher tax? No. Married couples and civil partners will be treated as “one unit” that lives together. Any additional property purchased by either person will attract the additional charge.
- Can we help our children buy? Many parents want to help their children get on the property ladder. Very few lenders offer guarantor mortgages these days and so many parents take out a joint mortgage with their child. Most lenders require the parent to be a joint owner and this will then attract the additional charge.
- I will own two properties – but only until I can sell my old one. If the buyer will own two properties at the end of the day of the purchase they will be liable for the additional charge. However, there is an 18 month period in which if you sell your main residence you can claim a refund of the additional stamp duty.
- Will this affect my purchase of a mobile home? No. The higher rate does not apply to purchases of caravans, mobile homes or houseboats.
Below is a flowchart taken from the consultation documentation which may help you to determine whether or not your purchases will be affected.
We are already seeing an influx of clients trying to get transactions through before these changes come in. If these changes affect you, give our Residential Property Team a call today on 01423 542775 to see how we can help push things along and save you some money.
Written by Michelle Crowhurst of Berwins Solicitors.