The 2015 Budget announced that as from April 2016, a surcharge of 3% on Stamp Duty Land Tax (SDLT) in respect of purchases of “additional residential properties”, such as buy-to-let properties and second homes which are valued above £40,000. This represents an attack on the buy-to-let market but also affects holiday home purchasers. The Chancellor’s argument was that this will make home ownership easier for first-time buyers. The additional SDLT will not be payable for caravans, mobile homes or houseboats or by corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda.
As a result, from April 2016, the following SDLT rates will apply:
Purchases before 1 April 2016 are unaffected. The changes apply to all transactions completing on or after 1 April 2016, save for those where contracts had been entered into on or before 25 November 2015 (unless the contract is later varied or assigned). This is likely to mean there will be a rush to exchange and complete on any such transactions before the April deadline.
People who own one property already (regardless of whether it is their main residence or a buy-to -let investment) who are looking to acquire a second property, will be impacted by this new measure and therefore there is likely to be pressure for a relief to prevent the additional rate applying to what will genuinely be the acquisition of a main residence, although the option to elect a main residence may assist.