Stamp Duty Land Tax on Second Properties
Posted on 11th September 2018 at 13:34
Recent changes to the Stamp Duty Land Tax system have produced massive benefits to first time buyers, with a total exemption of paying any SDLT on properties under £300,000.00 (See our ‘First Time Buyers – A Helping Hand’ blog for more information). Taking a different view, there are now questions as to the effects on those purchasing second properties, and many are questioning there is a need for review.
Many people purchase second properties as an investment opportunity to be used as buy-to-lets, with others purchasing additional property for holiday home purposes and leisure. Records indicate that since the year 2000 the number of people purchasing more than one additional property has increased by 30%.
But is this enough for our economy, and what are the effects?
When purchasing a second property, as well as the normal Stamp Duty rates, buyers are subject to pay an additional rate of SDLT of 3% of the property value. Your Conveyancing Solicitor Preston, MG Legal, will be able to advise you of the exact figure payable from the outset. If you are unsure about what you would be paying, contact us today on 01995 602 129 or email firstname.lastname@example.org.
Example – You are purchasing a property for the price of £150,000.00. The usual rates of SDLT, provided that you are not a first-time buyer - where different rules apply, will be payable, totalling £500.00. In comparison, if the buyer is purchasing a second property, the additional 3% is also payable which would make the total SDLT £5,000.00.
To further complicate matters, another factor to consider is whether the property being purchased will be replacing the buyer’s main residence. If the property is to replace the buyer’s main residence, a refund for the additional rate may be claimed back at a later date. To be eligible, the buyer must dispose of their main residence within three years of purchasing the second property. At MG Legal, your specialist Conveyancing Solicitors Preston are on hand to assist with claiming this back.
Recent research carried out by Company – Black Brick, suggested that in 2017 a substantial percentage of conveyancing transactions were for clients purchasing their only property, not for additional property purchases. Their managing partner concluded that this arises as a result of the SDLT implications and the additional 3% payable.
In effect, these rates are said to be putting buyers off purchasing more than one property which, subsequently, is affecting the demand for housing and the economy. There are now talks for the need of a government reassessment into the scheme to recognise a need for change in this respect; for the rates to be reduced in order to let the buy-to-let sector, and the subsequent effects on the economy, grow.
Whether it be your first property or an additional property transaction, your Preston solicitors would be delighted to assist you throughout the conveyancing process (see our blog 'The Conveyancing Process' for more information) and are always on hand to advise on the SDLT implications, as well as any other queries. Contact us today on 01995 602 129.
MG Legal - Your Local Conveyancing Solicitors Preston
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