Thursday, November 26, 2015

The 3% BTL stamp duty surcharge

Well what can you say? George has done it again... kicked us right where it hurts when it comes to landlord tax.

Yesterday's Autumn Statement saw him announce a 3% Stamp Duty Land Tax surcharge for landlords and second home buyers.

The chancellor hopes the new surcharge will raise an additional £1bn by 2021.

The changes come into play from April 2016, so if you're wanting to purchase another BTL without the additional 3% then you've got the next five months to do so.

A word of warning - expect a bun fight, as every man and his dog will be thinking the same.

Just before you log on to Rightmove, it might be worth considering the fact that any Stamp Duty charge will still be able to be offset on your capital gains liability when you come to sell the property, making that extra cost at purchase able to be offset at sale time.

The pay off might make it actually worth holding back on buying as there might be enough of a slump in prices post April to make it worthwhile paying the extra 3% Stamp Duty.

But as we've witnessed over the past few months, the situation is ever changing, and the status on a landlords capital gains might change again.

Yesterday's statement, underlined the fragility of the Capital Gains status quo, with a change to the payment period on CGT from the sale of residential property coming down from  21 months after disposal to just 30 days. This change come in from April 2019.

What does make it seem that Osborne is out to get us, is the expected exemption of commercial property investors from the surcharge. Those with more than 15 properties are expected to be exempt.

Anyway, it is, what it is.

Watch this space for further clarification, but put simply these will be the new rates landlords and second homeowners will be expected to pay in Stamp Duty from April 2016 -

  • Up to £125,000 - 3%
  • £125 - £250,000 - 5%
  • £250 - £925,000 - 8%
  • £925 - £1.5m  -13%
  • over £1.5m  -15%


Read the Gov Documents on the Autumn Spending Review 2015

Here's more reaction from others in the industry -

David Cox, ARLA's MD commented

 ‘Increasing tax for landlords will increase rents and reduce property standards for tenants.
To make owning a BTL property financially viable, landlords will need to pass on the increased stamp duty costs to tenants, who will in turn see less spent on maintaining their property and of course see increased rents,’

Richard Lambert, the NLA's chief exec commented

‘The exemption for corporate investment makes this effectively an attack on the small private landlords who responded to the housing crisis by putting their own money into providing homes by the party that they put their faith in at the election,’





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3 comments:

  1. NatalieNovember 26, 2015 at 2:33 PM

    Do you know if limited companies are exempt from paying the extra SDLT or does it apply to anyone with less than 15 properties?

    ReplyDelete
  2. ChrisNovember 27, 2015 at 12:36 PM

    If purchase of a second property is to be subject to Stamp Duty at the higher rate, does that also mean that a landlord wishing to move house himself would be faced with a massive charge, if his BTLs are in his own name? So no landlord can ever again move house?? What does that do for social mobility, housing market flexibility etc?
    Presumably as always the devil is in the detail, but George Osborne will certainly want to make sure landlords don't buy a property, live in it for 12 months and then let it out to dodge the higher rates.

    ReplyDelete
  3. AnonymousNovember 28, 2015 at 1:44 PM

    Don't be fooled with the idea that Osbourne is trying to reduce buy to let. His plan is to transfer the buy to let market to large corporations instead. If you check the rules its clear that 'corporate entities' will be exempt from the new stamp duty and can still claim interest against tax. A corporate entity would have to own 15 or more properties as far as I can see ensuring that only the rich can benefit. This won't help reduce house prices or rent at all but just ensures that normal people cannot invest in property for their own future. We will instead be forced to invest in pension companies and banks which will in turn buy properties and rent them. They will make huge profits and we will get a tiny percentage for our pension. How does that benefit anyone trying to buy or rent a home? Osbourne is simply doing what he has always done which is to push business towards a few big corporations. He doesn't like the idea that normal working people might be able to suppliment their low income or invest for the future to suppliment a small pension. Recently the press and TV has been full of stories about rogue private landlords, no doubt to get readers and viewers behind the idea that buy to let is a bad thing and should be stopped. They fail to mention that some of the worst landlords are actually huge housing associations and large companies who will get even more properties now. The idea that everyone who owns a property and rents it out is rich and cares only about money is simply not true. In fact I would suggest the bigger corporations are more likely to put profit before caring for their tenants.

    ReplyDelete