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Confused about the new Stamp Duty Land Tax (SDLT) rules?
Monday 25th April 2016
Property Scene spoke to Richard Ainsworth Head of Conveyancing at Marsden Rawsthorn Solicitors to get an expert view of the potential impact of the recently implemented tax changes which adds a 3% surcharge on stamp duty payable on the purchase of additional residential properties
I am a first time buyer looking to buy a residential property for my own occupation. How will the new tax changes impact on me?
The good news is that the surcharge will have no direct impact on you. The legislation will typically affect landlords looking to expand their residential portfolio or those looking to purchase a second or holiday home. The hidden impact may be a reduced number of buyers in the market. This could potentially affect properties which are part of a chain of transactions particularly if any new or existing landlords considering a buy to let property purchase decide to curtail their investment decision because of the surcharge.
I am thinking about selling my existing residential property and buying something new. I don’t own any other property; will I be affected by the surcharge?
No, in the same way as first-time buyers, any individual looking to sell and buy a further property will not be affected providing they do not own any other property and the purchase and sale is either simultaneous or a sale is completed prior to purchase.
Who typically is affected by the change in legislation?
The impact is felt by residential property investors but there are a number of other purchasers who will inadvertently become liable for the existing charge in the same way. These include parents buying a second property for their children to live in or those choosing to help their children get onto the property ladder, taking a joint mortgage to support the lenders earning criteria. Those who potentially may be caught in the same way are separated marriage couples or civil partners unless they are separated under a court order or formal deed of separation. Holiday home purchases are also liable including those which cannot be used all year round
Are there any exceptions to the rules?
Yes there are a number of exceptions. The higher rates will not apply to non-residential or mixed use properties, those transactions where consideration is less than £40,000, purchase of land even if it will subsequently be used for residential purposes and other purchases including caravans, houseboats and mobile homes.
What is the position if I purchase a property intended to be my sole residence but I haven’t yet sold my existing property.
The property would attract the additional SDLT rate on the purchase but there are special rules attached to particular circumstances in this area. We are happy to advise anyone who is not completing a simultaneous purchase and sale of a property eventually intended to be their sole residence.
Author: Richard Ainsworth
See more news from 2016.
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- Lisa helped me understand the procedure and was very kind and patient with me.
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