MSE News: Autumn Statement 2015: Stamp duty hike on buy-to-let and second homes

gadgetmind

alibean121 wrote: »

Surely people on the whole do sell the first before buying the next unless they want to keep both? I think that's a non-issue.

We had a three month overlap, so not that uncommon.

HappyMJ

satchef1 wrote: »

One of the government's objectives here is to try and encourage people like yourself to place the old home back on the market. They'd really rather you didn't keep it to rent out.

TBH I'd be surprised if there isn't more to come. They'll be watching to see what effect the SDLT and BTL mortgage tax relief changes have on the market, and could go further if need be.

I am sure it will reduce supply. It will reduce the number of landlords competing for business. Reduced supply means demand will be higher for any rented property coming on to the market and as there are so many renters to choose from the rent can be increased. Increases in rent will improve yields and prices of property go up. This will have the affect of pricing even more first time buyers out of the market further increasing demand for rental properties which the mum and dad small investor landlords will now be avoiding.

I'll hold on to my property for a few more years and watch it grow in value and the yields increase. Thanks Mr Osborne.

As I already own a Ltd. company for my work any further purchases I might make will be purchased in the Ltd. companies name and avoid the additional 3% tax.

dinkylink

I currently live in my own residential property.


I also have 1 additional btl property with long standing tenants.


If I were to move home, eg sell my own residential property and buy another to live in, would I be liable for this 3% surcharge on the new residential property?

wastedtalent

dinkylink wrote: »

I currently live in my own residential property.


I also have 1 additional btl property with long standing tenants.


If I were to move home, eg sell my own residential property and buy another to live in, would I be liable for this 3% surcharge on the new residential property?

The current assumption is you would, so might be best evicting your tenants [see above, increasing even more demand for rented accommodation] and selling both properties to buy your next.

I would hope that maybe purchasing a primary residence would be exempt, else we may see a big increase in evictions.

dinkylink

wastedtalent wrote: »

The current assumption is you would, so might be best evicting your tenants [see above, increasing even more demand for rented accommodation] and selling both properties to buy your next.

I would hope that maybe purchasing a primary residence would be exempt, else we may see a big increase in evictions.

Thanks, lets hope it is exempt as otherwise I think both landlords and tenants would be unfairly penalised. You're right though, if it isn't exempt the best thing financially for me would probably be to evict my tenants and sell the btl seeing as the purchase price of any new residential property (and therefore Stamp Duty) I get would be far higher then my btl.


So obviously I would have to give up my btl, but my tenants would be even worse off as they would be made homeless. They would also likely have trouble finding other accommodation as they receive benefits, plus their new rental property won't be approx 7.5-10% below market rate, as mine is, which reflects our good long standing relationship.


Of course they will undoubtedly face these problems at some point if I ever do decide to sell, but before this change I had no intention of doing this any time soon and this could force my hand


I would imagine a lot of current landlords would also find themselves in this situation, potentially meaning a lot of existing tenants could also be made homeless which surely the government don't want to happen.

gadgetmind

dinkylink wrote: »

I would imagine a lot of current landlords would also find themselves in this situation, potentially meaning a lot of existing tenants could also be made homeless which surely the government don't want to happen.

The house will presumably not stand empty, so either 1) bought by another landlord, or 2) bought by someone to occupy themselves. In case 2, those people may well be renting now, so one rental off the market, but another one free.

_CC_

HappyMJ wrote: »

As I already own a Ltd. company for my work any further purchases I might make will be purchased in the Ltd. companies name and avoid the additional 3% tax.

Do Ltd companies pay no stamp duty on residential purchases then? I always thought they paid the same as individuals, bar the higher rate of 15% for over £500k...

silvercar

_CC_ wrote: »

Do Ltd companies pay no stamp duty on residential purchases then? I always thought they paid the same as individuals, bar the higher rate of 15% for over £500k...

They do pay stamp duty, but if they only owned one property then they wouldn't be hit for the extra 3%, possibly.

So silvercar Ltd could own one and silvercar2 Ltd could be created to own property 2.

jamei305

wastedtalent wrote: »

The current assumption is you would, so might be best evicting your tenants [see above, increasing even more demand for rented accommodation] and selling both properties to buy your next.

I would hope that maybe purchasing a primary residence would be exempt, else we may see a big increase in evictions.

I don't see how a primary residence can be exempt, this must apply to ALL residential property purchased other than when the purchaser has no such existing property.

The reason for this is that SDLT is payable to the moment of purchase, and can't take any future use into account.

So whether you are buying a second house with the intention of moving in and selling your old home, or doing it up and selling it on, or having your granny live it...all reasons will come under the new tax.

The purpose for which a property is used can always change over the months or years, regardless of what was intended at the time of purchase. There can't be any guesses made when collecting this extra stamp duty.

jamei305

If a landlord with two rental properties worth £100K each wants to move into a million pound home, they face a £30,000 extra stamp duty bill for purchasing it, as it will be "an additional residential property".

Sell both rental properties and purchase two new ones after moving, means the landlord saves £24,000.