In his recent autumn statement, the Chancellor George Osborne announced that from April 2016 buyers of buy-to-let properties and second homes will have to pay an additional 3 per cent stamp duty. This change comes into effect immediately, meaning that any anyone who exchanged on a property after 26th November will need to complete before 1st April 2016 to avoid the new rates. (Properties that exchanged on or before 25th November are unaffected).
In the last three weeks since the announcement we have experienced a surge in enquiries from private clients trying to secure and invest their money before the April deadline.
Not surprisingly, the stamp duty hike has put many landlords into shock, coming so soon after the Chancellor’s July announcement that they were to lose significant tax relief on their profits.
As it currently stands, stamp duty is 0% for properties up to £125,000, 2% from £125,001 to £250,000, 5% from £250,001 to £925,000, 10% from £925,001 to £1.5m and then 12% above that. These duties remain the same for residential and first-time buyers, but an extra 3% will be added for all properties above £40,000 if it is to be used as a buy-to-let or second home.
To put this into actual money, the new 3% additional stamp duty on a £300,000 purchase will see the stamp duty bill nearly triple from the current £5,000 to £14,000.
The impact of the stamp duty rise post April is harder to pinpoint. Whilst it is expected that demand for buy-to-let properties will be dampened, an adverse impact is likely to be that landlords will put up their rents to cover their additional taxes. This will hit those same first time buyers that the Chancellor is trying to help - making it harder for them to save for a deposit.
Time will tell the outcome but at the moment, it is clear that buyers are looking to invest before the 3% April stamp duty increase hits their pocket.
For further information about how Premier Property Search can assist you in finding and acquiring your investment property before the new tax is introduced in April 2016, contact www.premier-propertysearch.co.uk, call 01962 793100 or email firstname.lastname@example.org