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Thu 03 Dec 2015
Last Wednesday, amidst a plethora of positive news about building thousands of new homes and further incentives for first time buyers, George Osborne dropped in an unexpected bombshell for buy-to-let investors.
From 1st April 2016, those purchasing buy-to-let properties, or second homes, will be required to pay an additional 3% Stamp Duty on top of current rates. It means a tax bill on a property purchase for £250,000 will jump from £2,500 to £10,000. Full table of rate changes detailed below.
Concerns have escalated within the Government over the past few years regarding the growth of the buy-to-let sector, and the starvation of the affordable homes market for first-time buyers. The move is intended to redress the balance, and is expected to raise an estimated £625m for the Exchequer in the next 12 months alone.
|
Value of Property |
Current Stamp Duty |
Stamp Duty from April |
|
0 - £125,000 |
0% |
3% |
|
The next £125,001 - £250,000 |
2% |
5% |
|
The next £250,001 - £925,000 |
5% |
8% |
|
The next £925,001 - £1,500,000 |
10% |
13% |
|
The next £1,500,001 + |
12% |
15% |
As a result of these changes, it is expected that the next 5 months will see a surge in the buy-to-let market, with many potential or existing landlords looking to purchase properties before the additional taxes come in to play – with exchange and completion required before the 1st April 2016.
It remains to be seen how this will affect the housing market in the long-term. Some experts believe this will naturally lead to a reduction in buy-to-let investors and boost owner-occupier rates; whilst others are of the opinion that people will continue to invest in property, as the potential for capital growth will counteract the stamp duty hike, and still offer good returns. We’re leaning toward the latter statement, as we believe investors to be more financially savvy than the Government gives them credit for.
Examples of the changes:
|
Value of Property |
Current Stamp Duty Costs |
Stamp Duty Costs from April |
|
£150,000 |
£500 |
£5,000 |
|
£250,000 |
£2,500 |
£10,000 |
|
£350,000 |
£7,500 |
£18,000 |
|
£450,000 |
£12,500 |
£26,000 |
Selling
If you are considering purchasing a buy-to-let investment, and would like help to identify a suitable property prior to April 2016 please just drop us a line. We can research and review suitable properties - including likely yield values, capital growth and re-sale potential.
"I have always found Lovetts to be very responsive to any concerns I have. The monthly statement and my rent are always produced on time and they send out an annual statement for tax purposes which is invaluable. Of the 4 letting agents I have used over the past 10 years Lovetts are by far the best!"
