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New surcharge on buying second homes

If you’re a landlord or an individual interested in buying a second property, the new 3% Stamp Duty surcharge which comes into force on 1st April 2016 will be relevant to you.

Stamp Duty

Stamp Duty

If you want to avoid the surcharge, you must complete on the purchase of a second property by midnight on 31st March 2016, unless you’ve already exchanged on or before 25th November 2015.

The charge applies to additional residential properties, covering buy to let or holiday homes. In contrast to Stamp Duty, the 3% surcharge is not a tiered tax where you only pay the rate above any threshold. It applies to the entire price of a property.

At the moment, the Government is considering whether professional landlords, companies or individuals who own 15 or more properties should be exempt from the surcharge.

However, the 3% surcharge does not apply to properties that are inherited or second homes under the price of £40,000.

So has this created a rush to buy investment properties? The truth is that many properties may have been inflated in price, as buyers rush to buy during the first three months of 2016. Therefore, if you are interested in buying a second property, it may even be cheaper for you to wait until after 1st April, as inflated prices could be more that the additional 3%!

Please note that all details will be finalised in the next budget, which is announced on 16th March 2016.

It’s not all bad news though! At Redstones, we proactively advise our landlords and help them to save costs wherever they can. Whether you’re a professional or first time landlord, Redstones are always on hand to help and advise on property management.