Buy to let and second homes stamp duty rates revealed
In the Autumn Statement the chancellor George Osborne announced that there was going to be a new range of stamp duty charges for anyone who bought a second home in the UK, which of course included buy to let investments. At the time he said that the rates would be revealed following the budget proposals and details of these charges UK have now been provided by the Treasury.
Broadly speaking the new proposals mean that everyone who buys a second or a buy to let investment will pay an extra 3% in stamp duty. There are some small concessions however, if a sale was completed before midnight on 31 March 2016, no charge will be imposed; in addition where contracts were exchanged before 25 November 2015, these will not be liable for the stamp duty charge even if the sale was not completed by April 1st.
The new bands for duty means that any home bought for up to a figure of £125,000 will be charged 3%, previously there was no charge. Properties which cost between £125,000 and £250,000 are now to subject to a 5% duty up from 2%. Properties selling at 250,000 to £925,000 8%, previously 5%, then moving into the higher categories, property selling at £925,000 to £1.5 million a rise to 13% and those over that a 15% charge.
Another exception involves those who are changing homes and temporarily own two properties due to not being able to sell the first property before having to buy a second; the time limit has been extended from 18 to 36 months. However they will still have to pay the duty, but if they sell their previous home within this time limit they will be able to claim back the duty paid. Similarly owners of multiple properties will be given grace of 36 months to change their main residence without incurring the extra 3% charge. However the time limit will begin from 25th November for those who sold their main property before the Autumn Statement when the extra charge was announced.
The stamp duty could affect couples who have separated and the chancellor has taken this into account by declaring that they will be treated as ‘separate entities’ in terms of property ownership, but the Treasury document warned that: “The government will not treat married couples as one unit if they are separated in circumstances that are likely to be permanent.”
The Chancellor expects the additional 3% duty to raise £3.7 billion for the Treasury over the next five years.