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Thursday 26 November 2015

Buy to Let - New Stamp Duty Land Tax for Investors

Morning all,

What a nice day to deliver such indifferent news from the genius in Downing Street! 

The industry is trying to assimilate the changes announced in yesterday’s Budget Statement whereby buy-to-let investors and those purchasing second homes are to be hit with a 3% increase in Stamp Duty Land Tax.

The changes were yesterday described by ARLA as a catastrophe for the private rented sector while accountancy firm Smith & Williamson said they would be the “nail in the coffin” for the buy-to-let market.

Franchise chain Martin & Co (us!) last night said the changes were “absolutely not catastrophic”, but admitted they were an unwelcome surprise.

What it could mean to you

For an average buy-to-let purchase of £184,000, it will mean an extra Stamp Duty Land Tax bill of £5,520 from next April. For the buyer of a rental property or a second home priced at £300,000, it means an extra £9,000 – bringing the total SDLT bill to £14,000.

One immediate implication is that first-time buyers could have an advantage over investors.
A second is that buy-to-let properties changing hands between investors may reduce in price.
A third possibility is that landlords who pay extra Stamp Duty on their properties will simply pass the increase along to tenants. A fourth possibility is that the housing market will be “turbo-charged” in the short term as landlords and second home owners embark on a buying spree.

However, others think it more likely that buy-to-let landlords will start selling up now, in order to get out of an increasingly hostile market, including other Budget Statement announcements about speeded-up times to settle their tax bills.

The Chancellor’s changes mean that each SDLT band will go up by 3% for buy-to-let properties as follows from next April 1:
  • Property purchase of £40,000 to £125,000 – Stamp Duty will be levied at 3% (currently 0%)
  • Up to £250,000 – 5% (currently 2%)
  • Up to £925,000 – 8% (currently 5%)
  • Up to £1.5m – 13% (currently 10%)
  • Over £1.5m – 15% (currently 12%).
In other changes announced by George Osborne, buy-to-let and second home purchasers will have less time to settle their Stamp Duty bill, reduced from 30 days to just 14 as from 2019.
At the same time, anyone selling a buy-to-let or second property will have to settle their Capital Gains Tax bill within 30 days, rather than anything up to 21 months after disposal, depending on when the sale occurs.

Notably, while going after private landlords, Osborne has so far protected corporate bodies or funds investing in the private rented sector. Larger firms owning 15 or more rental properties will not have to pay the higher rates, although this is subject to consultation.

I share the opinion of many as it appears that Mr Osbourne is intent on squeezing the life out of landlords in the private rented sector and his insistence on adding new rules and an increasing amount of red tape are only serving to frighten landlords out of the market in a time when they are sorely needed to continue to provide housing to people unable to buy. I would suggest the real solution to the problem would be to focus on the well documented lack of new property being built across the UK, but hey, what do I know?!

More to follow as it comes......................

Friday 20 November 2015

Oxford Market Intelligence - How does your property rate?

Morning Folks,


I hope everyone is well.

Tis important to keep abreast of the rental market so I thought the latest national statistics may be of some interest to you.

https://drive.google.com/file/d/0BxT4ZuA72V-NcEplMzVPblVxdVk/view?usp=sharing

Feel free to call me for a chat about this or if you would like any advice regarding your property and where it sits in the Oxford food chain.

Happy Friday all.

Best regards