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Proposed changes to Stamp Duty Land Tax announced in the Autumn Statement


Legal Updates, Property

George Osborne yesterday announced a number of changes to Stamp Duty Land Tax for second homes and buy-to-let properties in his Autumn Statement, which could have serious implications for landlords and those wishing to invest in property.

In the changes announced, buy-to-let landlords and people buying second homes will soon have to pay more in stamp duty. They will have to pay a 3% surcharge on each stamp duty band from April 2016 in England and Wales. This means that for properties worth between £125,000 and £250,000, where the standard stamp duty is currently 2%, buy-to-let landlords will now pay 5%.

The Government believes that the proposed new surcharge will raise £1 billion extra for the Treasury by 2021. However, there is concern among landlords that the new surcharge will be detrimental to investment in rented properties.

There is some comfort for commercial property investors, however, as those with more than 15 properties are expected to be exempt from paying the new charges.

Changes to Capital Gains Tax (“CGT”) rules were also announced which will mean that from April 2019, rather than waiting until the end of the tax year, buy-to-let landlords will have to pay any CGT due within 30 days of selling a property. This is going to be a further ‘blow’ to landlords who are already set to receive a lower rate of tax relief on mortgage payments. George Osborne announced earlier this summer that from 2017, landlords would only receive the basic rate of tax relief of 20% on mortgage payments.

The proposals have been interpreted by some as a clear message from the Treasury that they want to limit investment by landlords in buy-to-let property and those who can afford second homes at a time when housing stock is restricted.

It has been suggested that some of the funds raised from the new stamp duty surcharge will be available to help buyers in England purchase property in their local neighbourhoods where holiday homes may have increased property prices.

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