The Autumn Budget raised the stamp duty surcharge for those buying second homes from 3% to 5% with immediate effect, hitting landlords wanting to purchase rental properties.
The surcharge is payable on top of standard stamp duty rates if you already own a residential property worth £40,000 or more, and you buy another.
Buy to let investors have already been clobbered by a series of changes in recent years that have lessened the appeal of being a landlord,with the latest change likely to put many off adding to their portfolios. These include restricting tax relief on mortgage expenses to basic rate only, as well as tougher lending criteria and higher interest rates, which have also brought challenges for landlords.
The new higher stamp duty surcharge rate won't apply if contracts had already been exchanged before 31st October.
More positively for landlords, Capital Gains Tax rates on residential property were left unchanged in the Budget, at 18% for basic rate taxpayers and 24% for higher rate taxpayers.
Are there any changes to stamp duty for first-time buyers?
First-time buyers hoping for an extension to the current stamp duty thresholds had their hopes dashed by the Budget and will need to hurry if they want to take advantage of current rates.
Currently First-time buyers at the don’t have to pay any stamp duty at all on the first £425,000 of the property value when purchasing a property costing up to £625,000. Stamp duty at 5% is payable on the portion between £425,001 and £625,000.
These thresholds are temporary and will end on 31st March next year, so that from April first-time buyer relief will be available on purchases up to £500,000, with no stamp duty payable at all on properties up to £300,000.
For other buyers the 0% threshold will reduce from £250,000 to £125,000.
You can find out exactly how much Stamp Duty you’ll need to pay on your property purchase using L&C’s Stamp Duty calculator. This has been updated to reflect the changes announced in the October Budget, and includes the changes made to the Stamp duty surcharge for additional properties.
