Implications of Stamp Duty Changes

Neil_Cummins

I am serving overseas in the Armed Forces and do not own a property at the moment. I want to get on the property ladder and buy a house this year. Although I intend to ultimately live in the house, initially I will rent it out to defray the costs. Will I be subject to the extra 3% stamp duty on second houses/buy to let, or will members of the Armed Forces who don't own a first property be exempt, as if I were not serving, I would be able to live in the house?

Neil_Cummins

Found the answer! The policy on stamp duty is out for consultation at the moment:

I can't post a link, but if you look on the gov.uk site and search for consultations you will find it.

Whilst it is not policy yet, the consultation document states that anyone buying a property that does not already own a property will only pay the standard rates of stamp duty irrespective of the intended use of the property. Phew!

Chocolatefund

I shouldn't think so as you'd technically only own one property.

Like you said though, we'll have to wait and see. Things are never as straight forward for us forces folk!

abijanzo

Currently posted overseas and returning to UK in summer. Trying to sell our home which was rented out whilst we were away (4 years) and going to buy another to live in (especially after the hike in SFA charges).


Problem now is that our chain has collapsed and our house is back on the market. We are still moving forward with the purchase having scraped just enough for a deposit.


BUT... we will own 2 properties for a period until our house sells and be subject to the higher rate of stamp duty. We can claim this back once we sell our old house but we have to demonstrate that this was our main dwelling. The consultation paper states that it must have been the main residence in last 18 months, but given our overseas posting this was impossible.


Of course, there is no mention of Armed Forces Covenant in the consultation paper. Whilst I understand the new policy is aimed at BTL landlords and those fortunate enough to have pots of cash for a second holiday home, this is penalising Forces personnel who have very little say in where they go and for how long.


I'm sure my additional £7500 bill will be well spent by the treasury!!!

Trying_to_be_good

abijanzo - I would raise your issue up the command chain to the policy folks in London, as whilst I don't think AF should be exempted from the additional stamp duty (there are some who already own more than one property, for example, or would have no intention of living in the first property they owned), where you can show that the ONLY reason you haven't been living in the property is by virtue of service in AF, I think you shouldn't need to prove the 18 months' main residence. All this is subject to the final rules being announced on Wednesday.

The "hike" in SFA charges is still resulting in a significant subsidy against market rents, just not as much as it was, so make sure you do all the maths - and know that tax/stamp duty rules can change at any time.

Trying_to_be_good

abijanzo

The consultation outcome paper (Consultation Outcome) only needs to mention the covenant if there's a disadvantage to Armed Forces/families/veterans because of their service. There's a paragraph that states:

"Employer provided accommodation
Work related accommodation which is provided and owned by an employer does not count when considering whether an individual is purchasing an additional property or not.

If an individual is living in work related accommodation provided and owned by their employer, that individual will be able to purchase one property without the higher rates applying (even if it will not be used as a main residence) as at the end of the day of purchase they will own one property."

So the Armed Forces living in SFA/SSFA are covered by dint of this (even if MOD don't technically own the property), as are all other folks living in owner-owned/supplied accommodation, no special treatment needed. :-)