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Stamp Duty Reforms - more buy-to-let opportunities?

View profile for Oonagh McKinney
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Stamp Duty Land Tax (SDLT) proposals outlined in March’s Budget came into force in July, paving the way for more investment in the rental market. The rate of SDLT on purchases of multiple residential properties will now be determined by the mean value of the properties, subject to a minimum rate of 1%, rather than their aggregate value.

Commercial Property Partner, Oonagh McKinney, explains “This means that if an investor buys 100 properties at £200,000 they will pay stamp duty at 1% equal to £200,000, rather than the old 5% which would have cost £1m. It is hoped this reform will attract large investors into the residential market – pension funds and institutions – and bring a much needed boost to the housing market.”

Buy-to-let investors who swamped the market before 2007, when cheap mortgages were easily available, faced hard times when values began to fall.

The Chancellor has also launched consultations to make it easier for residential investors to become a Real Estate Investment Trust (REIT). This would mean they would not have to pay capital gains tax. He is proposing to scrap the 2% entry charge that landlords pay to become a REIT and doing away with the rule which restricts REITs to companies listed on the stock market – but not until the Budget of 2012.

Oonagh concludes “If this reform is passed, pension funds would be allowed to turn property portfolios into REITs and allow smaller buy-to-let landlords to benefit from the tax breaks on capital gains.”

For a free initial consultation please call 01202 499255 and Oonagh or a member of her team will be happy to discuss any questions you may have.