Stamp Duty Land Tax - an update
Posted on Monday, December 14, 2015
From 1st April 2016 the new Stamp Duty Land Tax (SDLT) will be introduced by the government. The tax will affect buy-to-let and second home sales from this date and whilst the full terms have not yet been confirmed, landlords and second home owners will be subject to an extra 3% stamp duty on the whole property price (up to £125k).
The government claim that this new duty is intended to give first time buyers an advantage over landlord and second home owners as they argue that these buyers are often competing for the same properties. It appears that the government favour home ownership at the expense of the rental sector.
The tax becomes due at completion rather than exchange so, to avoid the new rate, you must ensure you complete before 1st April 2016. The average property sale takes 12 weeks to complete so we are expecting to see a spike in house sales to landlords and second home owners from now until February 2016.
In conclusion, if you base the new duty on £155,917 (which is the average house price in Leicester) landlords and second home owners will pay from 1st April 2016 £5296 is stamp duty compared to £618 if the completion was before this date. For anyone considering expanding a property portfolio or making their first investment purchase the new duty is something to take into consideration so if you can compete by 31/03/16 do!