A 3% stamp duty increase on the purchase of secondary properties comes into effect today, April 1st 2016. Chancellor George Osborne announced plans to increase stamp duty land tax (SDLT) in his Autumn Statement in November, and the changes will affect anyone buying a second home, buy-to-let or residential property.
According to a report by The National Association of Estate Agents (NAEA), a last-minute rush by buy-to-let buyers to beat the deadline for the tax hike meant that housing demand in February was at its highest level for 12 years. Only one in four sales made in February were to first time buyers, who were effectively squeezed out of the market by the additional demand from buy-to-let landlords.
Mark Hayward, managing director of the NAEA, believes that the outlook for first time buyers could improve now that the new rates are in place. However, he does not believe that the changes go far enough to help support home ownership and first time buyers: “The mounting pressure and increased demand for housing has meant that first-time buyers have had to compete with landlords for property and as a result they have lost out.
“We would like to say that come April things will look better for first time buyers. Schemes like the Help to Buy Isa, Help to Buy scheme and the new Lifetime Isa all sound great on paper, and there’s no doubt that some young people will definitely benefit from them.
“The crux of the problem though is that there is still a huge issue with supply and until we build more homes, and crucially the right sort of homes, we cannot fool ourselves into thinking we are doing enough to help people buy their own home.”
The new rates will see stamp duty charged on second homes and buy-to-lets at a rate of 3% on the first £125,000 of a property. 5% will be payable between £125,001 and £250,000, 8% will be payable between £250,001 and £925,000, 13% between £925,001 and £1,500,000, and 15% on properties above £1,500,000.
According to figures from the Land Agency, the average cost of a property in England and Wales is £188,270. Before April 1, the stamp duty on a property of this value would be £1, 256. Today, stamp duty would be £6,913 – a rise of £5,648.
If you are thinking of investing in a buy-to-let property or a second home, try this handy Stamp Duty Calculator tool. You can also find more information about the SDLT changes on the government’s website.
Whether you are looking for your first home or thinking about buying an investment property, Weale & Hitchen can help. We’ve been matching people with properties for over 25 years and you can find Weale & Hitchen branches in Bury, Holcombe Brook, Ramsbottom, Harwood and Rawtenstall. Alternatively, why not take a look at all of the properties we currently have available on our brand new website?
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