Individuals, who are considering the purchase of a second home, or a buy-to-let property, would be advised to complete their purchase before 1 April 2016. From this date new rates of stamp duty land tax (SDLT) will apply.
In his autumn statement, George Osborne announced the following change:
“Higher rates of Stamp Duty Land Tax (SDLT) will be charged on purchases of additional residential properties, such as buy to let properties and second homes, with effect from 1 April 2016. The higher rates will be 3 percentage points above the current SDLT rates. 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 help towards doubling the affordable housing budget. This will help first time buyers.”
Further clarification from the Treasury seems to indicate that these changes will include a new 3% band of SDLT on property purchased in excess of £40,000 up to £125,000.
The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda.