2nd Property -SDLT Changes - Have Your Say

carpediemspirit

Hi All,

Following the excellent advice I got given earlier by you lovely people, I wanted to return the favour and share some additional information which might be of interest:

1. 2nd Property - Higher SDLT - Consultation

This was published on 28th December and is available at the link here:

https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

2. Your Feedback

You all have the opportunity to contribute to the shaping of this policy and I urge you to read it and send your feedback to the following e-mail address: sdltadditionalproperties@hmtreasury.gsi.gov.uk

Having read through the consultation document I note that those who own a rental property, but not their main residence, will be liable for the extra tax. There is an exemption for existing buy-to-let owners who own a main residence and at present, this does not extend to landlords who do not own their main residence.

This puts considerable people at a disadvantage as should they wish to buy a property to live in as my main residence than they end up paying the higher stamp duty land tax charges.

This is in stark contrast to somebody who currently has a rental property and a main residence, who then then buys an additional property to live in. In this instance, this party is exempt from the charges.

The forthcoming changes should apply equally to everybody and I believe this exemption from the charges should apply to landlords who do not own their main residence.

If you have any comments about the consultation, I would urge you to e-mail the treasury and make your views known.

Doozergirl

The point is to deter multiple property ownership or raise extra revenue from those that can afford to pay it.

A Landlord with only one property has the option to sell the BTL or move into it to avoid the extra SDLT. If they buy a second house, they are increasing the number of properties owned, regardless of whether it is their home - if the point is to keep multiple property ownership down/taxing those that can afford it. Whether the purchase is BTL is by-the-by.

Consultation is great, but I don't see legislation being altered when it is catching who they want to catch. The number affected by the situation you describe will be small - certainly not enough to alter an election decision.

anselld

Consultation seems to focus on purchases with a view to rental.
What about property trading businesses/individuals as opposed to investment, ie buy-refurb-sell and taxed as income? These are not increasing or decreasing the supply of housing, in fact they are bringing back into use housing which may otherwise remain uninhabitable (all be it at a profit presumably). Are individuals and businesses who are genuinely trading as property developers going to have to factor SDLT2 into their costs?

Daniel54

carpediemspirit wrote: »

This is in stark contrast to somebody who currently has a rental property and a main residence, who then then buys an additional property to live in. In this instance, this party is exempt from the charges.

It is not clear if you have misunderstood or made the wrong choice of words.

If somebody has a BTL and a main residence ,they can replace the main residence.If they have not sold their previous main residence at the time of completion of the transaction they will pay the additional 3% SDLT but can claim this back if they sell the previous main residence within 18 months.

They cannot buy an additional property and not sell their previous main residence without paying the additional SDLT

The policy is consistent (whether you agree with it or not).If you own a residential property and purchase another on or after 1st April 2016,the second purchase is subject to the additional SDLT .which can be claimed back if the first property was your main residence and is sold within 18 months

Mc_Marty

I have read the consultation paper but I'm not sure I understand what happens in this circumstance:


A person owns only a main residence. They purposefully intend to buy a new main residence before they sell there old main residence. This means at the point of the transaction they own 2 properties and pay the higher SDLT.


However they intend to renovate the newly purchased property and therefore do not want to move into it immediately whilst building work is being carried out. Instead they continue to live in the original/old main residence for another 6 months until renovation is complete. Once they move into the new property they then sell the old main residence (still within the 18 month period).


In this circumstance the newly purchased residential propert does not immediately become they're lived in property. Will they still be entitled to the higher SDLT refund?


I assume yes, but in this document it always refers to the refund being given only when the new property immediately becomes the lived in property, which in this case doesn't happen straight away.


What do you think?

booksurr

Mc_Marty wrote: »

What do you think?

there are dozens of individual scenarios which have not yet been mapped out - that is why it is a consultation document. So go and respond to it because no one on here can foretell what will appear in the final legislation that will answer your question

Mc_Marty

Thank you. I have sent my question onto HM Treasury

carpediemspirit

Daniel54 wrote: »

It is not clear if you have misunderstood or made the wrong choice of words.

If somebody has a BTL and a main residence ,they can replace the main residence.If they have not sold their previous main residence at the time of completion of the transaction they will pay the additional 3% SDLT but can claim this back if they sell the previous main residence within 18 months.

They cannot buy an additional property and not sell their previous main residence without paying the additional SDLT

The policy is consistent (whether you agree with it or not).If you own a residential property and purchase another on or after 1st April 2016,the second purchase is subject to the additional SDLT .which can be claimed back if the first property was your main residence and is sold within 18 months

The problem is as I understand it is that the proposed law will not apply retrospectively. So for example if I am a landlord and I own a rental property and a main residence where I live and I shift the main residence to a new property (and sell where I live currently) than I am effectively shifting my main residence and not liable for the extra SDLT. This person effectively will still be allowed to have an additional property and therefore will have two properties at the end of the transaction.

My situation is that I have a flat which I rent out and live with my parents and thus do not have a main residence. Yet when I buy a place to live in, I will have to pay the extra SDLT whereas the person in the above example does not.

Any feedback or questions about this ?

Bluebirdman_of_Alcathays

carpediemspirit wrote: »

My situation is that I have a flat which I rent out and live with my parents and thus do not have a main residence. Yet when I buy a place to live in, I will have to pay the extra SDLT whereas the person in the above example does not.

Any feedback or questions about this ?

You do have a main residence - your parents house. You already are a homeowner, and when you buy a place to live in, it will be your second property, and you'll (probably, as nothing is set in stone) be liable to the extra SDLT.


As the chancellor has explicitly stated that the idea of the tax is to help first time buyers at the expense of landlords, I can't see how or why you should be exempt from this.

carpediemspirit

Bluebirdman_of_Alcathays wrote: »

You do have a main residence - your parents house. You already are a homeowner, and when you buy a place to live in, it will be your second property, and you'll (probably, as nothing is set in stone) be liable to the extra SDLT.


As the chancellor has explicitly stated that the idea of the tax is to help first time buyers at the expense of landlords, I can't see how or why you should be exempt from this.

Then why is it I am excluded from the exemption yet a landlord who changes their primary residence is exempt ?

Doozergirl

carpediemspirit wrote: »

Then why is it I am excluded from the exemption yet a landlord who changes their primary residence is exempt ?

Because they aren't increasing the number of properties they own over more than a very short period of time?

They bought two properties before the increase and the status quo will remain.

It's not about main residences, it's about owning 'another' property. Add to your portfolio, pay additional SDLT.