From 1 April 2016, higher rates of SDLT (Stamp Duty Land Tax) will apply to the purchase of second homes and buy-to-let properties where the chargeable consideration exceeds £40,000 – as announced in the Chancellor’s Autumn Statement.
What are the higher rates?
The higher rates will be 3% above the current SDLT rates for residential property. Therefore, the following SDLT rates will apply on a progressive basis to acquisitions of such properties:
- £0 to £40,000: 0%
- £40,001 to £125,000: 3%
- £125,001 to £250,000: 5%
- £250,001 to £925,000: 8%
- £925,001 to £1.5 million: 13%
- Over £1.5 million: 15%
Investors of additional residential properties will have to effectively opt in to the higher rates by declaring that the acquired property will not be their primary residence.
Where does it not apply?
The increased rates, as highlighted in the Autumn Statement, will not apply to corporate or fund investors making significant investments in residential property. The Government will consult as to whether the ownership of more than 15 residential properties is appropriate as a “significant investment” for these purposes. The higher rates will also not apply to acquisitions of caravans, mobile home or houseboats.
If you are considering investing in an additional property and would like some legal advice, please contact our residential property team in London.