In his Autumn Statement 2015, Chancellor George Osborne announced a stamp duty increase of three percentage points on purchases of additional properties, such as buy to let and second homes, and outlined other reforms that will affect the buy to let sector.
Effective from 1st April 2016, the higher rate of Stamp Duty Land Tax (SDLT) will be 3% above current SDLT rates and will apply to the purchase of additional properties, valued at more than £40,000. The purchase of caravans, mobile homes or houseboats will be exempt from the higher tax bracket.
Speaking in the Autumn Statement, Chancellor George Osborne said:
“The government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute.”
The tax receipts will also help towards doubling the affordable house budget. The statement said it would help first-time buyers.
Before now SDLT applied to buy to let landlords on properties in England, Wales and Northern Ireland priced above £125,000. The previous levy due on properties worth up to £125,000 was 0%, 2% on £125,001-£250,000, 5% on £250,001-£1.5 million and 12% on properties priced at more than £1.5 million.
Robert Pullen, tax manager, at Blick Rothenberg LLP said:
“Buy-to-Let purchases from April 2016 will suffer an additional three per cent stamp duty. This is likely to cause an initial spike in house prices as investors rush to buy, but the long term impacts are not known. It could result in even larger rent costs as landlords seek to recover the new tax.”
Following on from the announcement this week by the Council of Mortgage Lenders (CML) and Which? that a new tariff of mortgage charges has been launched to simplify mortgage fees, the Chancellor used his Autumn Statement to once again endorse the new scheme.
“The government remains committed to improving the transparency of mortgage fees and making it easier for borrowers to choose the best mortgage deals,” he said.
The Chancellor also announced reforms to HMRC, stating that by 2020 most businesses, self-employed people and landlords will be required to manage their tax affairs digitally, providing HMRC with quarterly updates via their digital tax accounts.
Here at Mortgages for Business, both Steve Olejnik and David Whittaker have commented on the Chancellor’s announcement.
Read Steve’s comments on how the Autumn Statement will affect investors purchasing buy to let property.
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