Buy-to-let landlords and owners of holiday homes could face another stamp duty rate hike in the Autumn Budget to further curb the acquisition of second homes.
It is rumoured that the Treasury is looking for fresh ways to raise money ahead of the Budget this autumn.
This increased stamp duty land tax surcharge would be expected to raise money for the Exchequer and help keep house prices down.
Landlords exiting the sector
There has been an increase in the number of buy-to-let landlords selling up and exiting the private rented sector in recent years, with tax and regulation changes cited as the main reasons.
The former chancellor, George Osborne, took a decision in 2016 to restrict mortgage interest relief to the basic rate of income tax and add a 3% levy on stamp duty for the purchase of additional homes. Buy-to-let mortgages now make up less than 13% of all new mortgages (down from 17% in 2015).
Government figures show that between March 2016 and March 2017 England saw a loss of 46,000 private rented homes.
Tax attack on second home owners
High profile objectors to the proposals are calling the potential stamp duty increase a “tax attack” on second home owners. John Redwood, the former trade secretary, has been quoted as saying: “There is no need to increase taxes and if you carry on increasing them you'll collect less money from people, which is the opposite of what we want to achieve.”
Others believe that the only real way to curb house price growth is to build more houses.
Who must pay the higher rate?
Michelle Petersen, Solicitor in our Conveyancing Law Team, explains “The current situation, since April 2016, means that that higher rates of Stamp Duty Land Tax applies to any purchase of additional residential properties. This includes second homes and buy-to-let properties. The higher rate is currently 3% above the standard rates of Stamp Duty Land Tax. In addition, in August The Bank of England increased the base rate from 0.5% to 0.75%. However, the impact for homeowners and mortgage holders is expected to be minimal as the base rate has remained so low for nearly a decade.”
Since then, a number of clients have been surprised to understand how the rules work and who qualifies for the higher rate of Stamp Duty Land Tax. Clare Hallett, Head of Conveyancing at Frettens, wrote an article in 2017 which clarifies When you must pay the higher rate of Stamp Duty Land Tax?
Michelle concludes “I recommend calling our team for a quote. We will talk through your circumstances and we will be able to clarify what rate of Stamp Duty Land Tax applies for you.”
Our Conveyancing Team and are happy to discuss any issues that this raises for you and we offer a free initial meeting or chat on the phone.
If you have any questions, you only have to ask us at Frettens. Please call 01202 499255 or 01425 610100 and Michelle or a member of the team will be happy to chat about your situation and your particular requirements.