People buying additional property, including buy-to-let or second homes, will face a 3 percentage point surcharge on stamp duty rates from April 2016.
Chancellor George Osborne announced the rate hikes, which will apply to any additional residential property costing more than £40,000, in today’s Autumn Statement.
The changes mean someone purchasing a £275,000 buy-to-let home would see their stamp duty bill rise from £3,750 to £12,000 – nearly three times as much.
The surge in buy-to-let popularity over the past few years is often blamed for preventing first-time buyers getting on the property ladder. For a full explanation of how buy-to-let works, see our free, printed Buy-to-let guide.
Osborne said today: “Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy.”
Under stamp duty rules that took effect last year, you pay different rates for different proportions of the property price. This will mean that the following additional property stamp duty rates will apply on each portion of the purchase price on buy-to-let and second homes.
What stamp duty rate will I pay?
|PURCHASE PRICE||CURRENT STAMP DUTY RATE (1)||NEW STAMP DUTY RATE FOR ADDITIONAL PROPERTIES (1)|
|Up to £125,000||0%||3% (2)|
|£125,000.01 – £250,000||2%||5%|
|£250,000.01 – £925,000||5%||8%|
|£925,000.01 – £1,500,000||10%||13%|
|(1) Rate applies to that portion of the purchase price (2) Properties up to £40,000 are exempt from stamp duty. Properties between £40,000.01 & £125,000 will be charged stamp duty on the full purchase price.|
The higher rates will not apply to purchases of caravans, mobile homes or houseboats.
Osborne claims the additional cash will raise almost £1 billion by 2021 which will in part be used to help first-time buyers.
However, there are fears the increase in stamp duty could be passed on to renters in the form of higher rents and lower maintenance standards.
David Cox, managing director of the Association of Residential Letting Agents, says: “To make owning a buy-to-let property financially viable, landlords will need to pass on the increased stamp duty costs to tenants, who will in turn see less spent on maintaining their property and of course see increased rents.”