A 3% stamp duty increase on the purchase of second properties is now in effect across England and Wales.
According to figures from the Land Agency, the changes mean that the stamp duty payable on an average home in England, valued at £188,270, will rise by £5,648.
Plans to increase stamp duty land tax (SDLT) were announced by Chancellor George Osborne in his Autumn Statement in November, and the new rates will affect anyone buying a second home or buy-to-let property.
The new rates are set to 3% on the first £125,000 of a property, 5% between £125,001 and £250,000, 8% between £250,001 and £925,000, 13% between £925,001 and £1,500,000, and 15% on properties sold for over £1,500,000.
Industry professionals have welcomed the changes, but many do not believe they go far enough to help first time buyers. Mark Hayward, managing director of The National Association of Estate Agents (NAEA) said, 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.
According to a report by NAEA, demand for housing in February 2016 was at its highest level in 12 years, as many investors and landlords rushed to purchase properties before the new rate came into effect. However, now that the April 1 deadline has passed and investors are faced with larger stamp duty bills, economists are predicting to see the UK housing market slow down.
Simon Rubinsohn, chief economist for the Royal Institute of Chartered Surveyors (RICS), said: “Over the past three months, we have witnessed a surge in buy-to-let activity. Since the Chancellor made his Autumn Statement announcement last November, investors have rushed to purchase homes before the Stamp Duty surcharge comes into effect.
It is inevitable that over the coming months, April’s Stamp Duty changes will take a little of the heat out of the investor market.”
BUYING A SECOND PROPERTY?
If you are thinking of investing in a buy-to-let or second property, you can find more information about the new stamp duty rates on the government’s website.
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