During the Autumn Statement 2014 the government revealed a fundamental overhaul of Stamp Duty Land Tax (SDLT) on residential property, removing the bands of tax that applied to the whole property value. This change decreased SDLT for 98% of residential property purchasers; aimed at assisting first time purchasers.
The government has continued to show its commitment to assisting people purchase their own home, the Autumn Statement of last year revealed a five point plan to achieve this.
This five point plan includes the introduction of an increase rate of SDLT on the purchase of ‘additional’ residential properties, i.e. aimed to affect those purchasing second homes or buy-to-let properties. The additional SDLT received by the HMRC is to be (partially) used to increase the affordable housing budget, further assisting first time purchasers.
On the 28th December 2015 the government released an open consultation which is intended to run until 1st February 2016. Confirmation of the final policy will be revealed during the Budget on the 16th March 2016. Whatever the final policy is, the higher rates will apply from the 1st April 2016.
The higher rates will only apply to matters that complete on or after 1st April 2016, provided contracts were exchanged after 25th November 2015. For those matters that have exchanged prior to 25th November 2015 then the current rates will apply no matter whether they complete on or after 1st April 2016.
On the face of it, the change is simple. Those properties that are being purchased as buy-to-let properties or as second homes will attract an additional 3% SDLT, as per the table below: