Buy To Let Stamp Duty Changes – 1st April 2016
In his Autumn Statement, Chancellor George Osborne announced unexpectedly that Stamp Duty for buy-to-let investors would rise from 1 April 2016.
Stamp Duty Changes
For all second homes and buy-to-let investments valued over £40,000 in England and Wales, a new 3% Stamp Duty Land Tax (SDLT) surcharge will be payable on top of the current progressive stamp duty.
The change in SDLT emphasises the government’s pledge to boost property supply and stimulate demand from first time buyers.
How Will The Rise Affect Buy-To-Let Investors?
There are several points buy to let investors should bear in mind;
- The property market in the UK has seen a 211% growth over the last 20 years, and this growth is projected to keep increasing in the future. In London, where property prices have climbed 446% over 20 years, the additional 3% SDLT surcharge becomes even less significant.
- With interest rates predicted to stay at rock bottom the likelihood is that the housing market will maintain a stable growth rate over the coming years.
- Growing gulf between supply and demand in the property market will remain for a long while, the Chancellors pledge to attempt to stimulate house-building efforts across the country is a long-term goal that will not impact the buy-to-let market for a long time.
- The precedent from past SDLT reforms would suggest that those who exchange before 1 April but complete after that date would be exempt. This issue will be clarified in the consultation process, which we will report on accordingly.
- UK Stamp Duty is still significantly less than other popular global markets, which can be as high as 10-15%.
While these new announcements might make investors with a short-term exit strategy a bit nervous, overall the buy-to-let property market will remain stable and continue to grow. Investment in the buy to let property market will continue to be a popular option for those looking to supplement their income or branch into the profession. The Chancellor has pointed out that the funds will be used as a method of stabilising the national housing market, and this is good news for long-term buy-to-let investors.