Home Front logoHow will the new Stamp Duty Rules affect me?

From 1st April 2016 the Government is proposing changes to Stamp Duty Land Tax (SDLT) that will affect property purchases across England, Wales and Northern Ireland. The principal of the change is a proposed 3% increase in Stamp Duty on purchases of ‘additional residential properties’ where completion takes place on or after 1st April 2016 (unless contracts were exchanged before 25th November 2015). At the moment the following are not set in stone as the Government are consulting on these changes but the most noteworthy points for buyers and investors looking to purchase property  are –  Additional Residential Properties – The purchase of an ‘additional residential property’ currently refers to the purchase of a home that will not replace the buyer’s main residence. A buyer will be liable for the extra 3% if, at completion, they own two or more residential properties including the one they live in.  The next consideration is the Sale of Existing Main Residence, if the property being purchased after April 1st replaces the buyer’s main residence, but that main residence has not sold at the time of completion, the purchase will be liable for the 3% Stamp Duty surcharge. If the original main residence is then sold within 18 months of completion on the new property the 3% surcharge will be refunded. The third proposal concerns Companies Buying Residential Property – As the proposal stands, the surcharge will also apply to companies buying residential property. This is to close the loophole that enables individuals buying property through a company they own or part-own. The fourth focus concerns – Married Couple, Civil Partners & Cohabitants – Married couples and civil partners will be treated as an individual when purchasing a residential property. As such, if either party already owns residential property, the extra 3% stamp will apply. Unmarried couples or other cohabitants (such as siblings or a group of friends) will not be liable for the surcharge in the same circumstances. If you own Two or More Properties Worldwide – The ‘two or more properties’ rule is proposed to apply regardless of where in the world any property already owned is, providing that the buyer is purchasing a home in England, Wales or Northern Ireland. For example, a buyer who owns a house in France and wants to buy a second property in London will be liable for the 3% Stamp Duty increase. Finally there are some Unaffected Parties & Exemptions The surcharge will not apply to first-time buyers, and owner occupiers moving home will also be unaffected providing they sell their property before completing on their new home. Sadly, the implications of such changes will hit many would be buyers very hard particularly parents trying to help their children by agreeing to go on the mortgage with them; if they already own a home themselves the extra stamp will kick in. It is important to remember that these proposals are still in the consultation phase, and therefore liable to change.