Buy-to-let landlords and people buying second homes will soon have to pay significantly more in Stamp Duty the Chancellor has announced.
He has decided to levy three per cent Stamp Duty on all bands. This means for most people who buy properties in our area will find costs have risen significantly, with previously no Stamp Duty paid up to £125,000, this figure will now be £3,750.
This amounts to getting around to almost one year’s rent and this is before you have paid other costs such as valuations, booking fees and survey fees to get onto the buy-to-let ladder.
On the positive side the Chancellor has indicated that properties under £40,000 will not attract Stamp Duty. Also it is not yet clear as I write if you do get the first £40,000 tax free with duty being charged after this figure has been reached, or you are charged on the whole amount of the purchase price over the £40,000.
I have to say I have done my figures on Stamp Duty being charged on the whole amount after £40,000 is breached. It also has to be said that when you sell your buy-to-let property you can lay off the cost of Stamp Duty paid at outset against the profits.
The Chancellor has also given indications that landlords with more than 15 properties can be exempted from the charges, with perhaps some exemptions for corporate, although as yet this area is very unclear.
It does appear that the Chancellor has got it in for the buy-to-let sector in a big way, as this is not the first hit this sector has suffered this year.
He has already given notice that tax relief will be cut for many buy-to-let landlords and he has taken away the wear and tear allowance.
The new regulations do not come into force until April 2016 but I predict we will have a very interesting market up to that time. After April 2016 we will see if the Chancellor’s strategy effectively clocks off future investment into private property to rent, that in itself will bring its own problems for the government and ultimately the tax payer.