In a drive to supposedly support home ownership and assist first time buyers, the Chancellor of the Exchequer has imposed Stamp Duty changes that levy a 3% penalty on those purchasing a second property. These Stamp Duty changes will mainly affect buy-to-let landlords but will also impact those purchasing second properties for other reasons, perhaps as a holiday home.
This announcement of this change prompted a huge surge in property purchases in the run up to the 1st April 2016 as landlords looked to, understandably, swerve this extra charge.
Stamp Duty from 1st April 2016
The government says that for 90% of property transactions, the Stamp Duty remains the same. Therefore for the remaining 10% of property transactions an additional 3% Stamp Duty surcharge is now payable.
For second homes and buy-to-let purchases, the new Stamp Duty rates are:-
- 3% between £0 and £125,000
- 5% between £125,000 and £250,000
- 8% between £250,000 and £925,000
- 13% between £925,000 and £1,500,000
- 15% on anything higher
As with standard Stamp Duty for residential properties, the tax is only payable on the portion of the price within each of the bands. Therefore for a property purchased at £200,000, 3% would be payable on the first £125,000, then 5% payable on the balance of £75,000, resulting in a combined Stamp Duty bill of £7,500.