From today (1st April 2016) the government has introduced a 3% levy on top of current stamp duty rates for the purchase of additional properties, a policy announced in George Osborne’s 2015 Autumn Statement.
Although initially expected to hit the buy to let market, the final draft of the policy has revealed that the new rules will affect anyone purchasing and thereby holding a second residential property.
Where an individual has purchased a new main residence but not yet sold a previous main residence, they will pay the higher rates. If, within 36 months of purchasing the new main residence they then sell their old main residence, they will be entitled to a refund on the higher rates paid.
The new Stamp Duty rates that take effect today are as follows:
Transactions over £40,000 and up to £125,000 – old rate 0%, new rate 3%
£125, 001 to £250,000 – old rate 2%, new rate 5%
£250,001 to £925,000 – old rate 5%, new rate 8%
£925,001 to £1.5m – old rate 10%, new rate 13%
Over £1.5m – old rate 12%, new rate 15%.
There are some exemptions. You will not be liable to pay the surcharge if:
The property is under £40,000
The property is inherited. (However, inherited property will be relevant when determining if a purchaser is purchasing an additional residential property or not.)
You are removed from the deeds of your former home
Taj Kang of Contractor Mortgages Made Easy commented: “There are strategies contractors can adopt that mitigate the impact of the new surcharge but to ensure they don’t fall foul of the complex legislation, assistance from an expert mortgage consultant and solicitor are essential.”
Article By: Ratchelle Deary at Contractor Mortgages Made Easy
Media Contact: Ratchelle Deary, Public Relations Manager
Tel: 01489 555 080