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The March Rush To Beat Extra Stamp Duty On Second Homes
April 28, 2016


Our residential conveyancing team were madly busy in March making sure none of our clients missed completing their purchases before Stamp Duty increased on purchases of Buy to Let and second homes. Other firms weren't so lucky as some of their clients saw their chains collapse and missed the deadline.

 

Changes to Stamp Duty mean that buyers completing their purchases from 1st April 2016  will pay 3% more  if they own more than 1 property at completion of the transaction.  So, in March, we saw new landlords and buyers of second homes rushing to complete – our team's hard work paid off and none of our clients were disappointed.

 

THE CHANGES

Purchase price Pre April stamp duty rate New rate
£0*-£125K 0% 3%
£125k - £250k 2% 5%
£250k-£925k 5% 8%
£925k-£1.5mil 10% 13%
£1.5mil plus 12% 15%

As an example, a property being purchased at £260,000 would attract stamp duty of:

  • £3,750 on the first £125,000 (compared to no tax previously);
  • £6,250 on the next £125,000 (compared to £2,500); and
  • £800 on the next £10,000 (compared to £500)
  • so new stamp duty of £10,800 instead of £3,000 on or before 31st March

 

THE NEW STAMP DUTY SURCHARGE WON'T AFFECT YOU IF:

  • at the end of the transaction you only own one property;
  • you are a first time buyer (even if it is a buy to let property[1])
  • you sell a property known as your main residence[2] and replace it with another property that is your main residence.
  • the price is between £0 and £40k

 

Granny Annexes

You may not be aware that this additional rate is likely to apply to granny annexes but the government has indicated that this was not intended and new rules may be introduced to put this right.

 

For more information about the new Stamp Duty rules please contact us.

 

[1] If your spouse/civil partner/child or partner owns their own property this may not be the case, you would need to seek specific advice

 

[2] Main residence has not really been defined but research suggests it would be where you say you reside, where your child resides to go to school and where you are registered to vote. It is clear that establishing this will be essential to getting your stamp duty figure right.

The information contained in this article is intended for general guidance only. It provides useful information but it is not a substitute for obtaining legal advice as the articles do not take into account specific circumstances. So do please Contact US for legal advice on the issues raised.