INSIGHT: The imminent stamp duty changes are causing concern
We have highlighted the Chancellor’s imminent changes to stamp duty a few times in the last few months (see the links below). To recap, an extra 3% of stamp duty land tax (SDLT) will be payable on investment properties and second homes over £40,000 from 1 April 2016.
The adverse effect of SDLT on some buyers has given rise to concern from a number of quarters and a government consultation to seek comments on the new rates closed on 1 February 2016. The government is now reviewing the feedback and plans to confirm the final policy design at the Budget on 16 March 2016.
Opinions on the rates are now filtering through to the public including those from bodies such as The British Property Federation, the Home Owners Alliance and the Council of Mortgage Lenders. In summary, it appears that the government is being asked to take the following into consideration:
- The higher stamp duty rate could damage confidence in the buy to let market. For example, it could:
- put off potential new landlords from purchases - thereby slowing down the property market;
- lead to a significant number of current landlords selling off their properties. This would mean a reduction in the number of rented properties available to rent. In turn, this might lead to higher rents.
- Not everyone wants or can afford to own a home – even if more affordable housing comes on the market. Reducing the number of buy to let properties on the marketplace could affect the ability of many families to rent in the areas they choose or need to live.
- There are circumstances where a couple want to buy a new home together but one of them has not been able to sell their house. This would put them in the category of buying a second home.
- The complex rules could easily confuse residential buyers.
We will have to wait and see what the government decides to do. In the meantime, the position remains that the SDLT will change on 1 April 2016. And with that in mind…
It’s not too late to beat the 1 April deadline…
For those who have just found a property to buy – it is not too late to complete the purchase before the 1 April 2016 deadline.
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
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