We are only a few weeks away from the March Budget, in which homeowners, investors and Landlords will be eagerly awaiting clarity on the proposed three per cent rise in Stamp Duty for second homes and buy to lets on English properties. During December, the Government held a consultation on the proposals, so here Harrods Estates share what the implications of some of these potential plans, shared in the Consultation could be.
While the consultation confirms that most homeowners planning to move their main residence will not be affected, for those that purchase their new home before selling their current one, could be liable to pay the higher rate while they still have two homes. It is expected that the following will be confirmed:
- The higher rate will be due at the time they purchase their new home.
- They will then have a window of 18 months to sell their former main residence and claim a refund.
- The change could also have ramifications for parents who had hoped to contribute money towards homes for their children.
- Implications on holiday / second homes abroad. Ie A foreign national, not domiciled in the UK, might be deemed to own a main residence in their own country, even if buying a property to use as their Main Residence in the UK.
These scenarios could therefore result in the new measures affecting many more home-buyers than immediately thought last Autumn. The detail to be unveiled in March is likely to clarify these matters, but could prove unsettling if confirmed, and particularly for the London market, which has tended to attract a higher proportion of international property investors.
Landlords and Multiple Dwellings
The Autumn Budget hinted of possible exemptions to the three per cent Stamp Duty Land Tax surplus on second homes and the consultation papers shared examples of what these could look like. In summary, it appears there could be potential for investors to secure a reduced SDLT rate if they purchase multiple units in a single developments, with 15 being the guide figure touted by George Osborne last Autumn.
If this was confirmed, then this could present some new opportunities for Landlords and Developers to work in more unison. Nick Shaw, Sales Manager of Harrods Estates Kensington Office, has already seen signs of this: ‘In some instances, Developers are already offering reductions in asking prices to cover the additional burden in SDLT from April onwards. Meanwhile, many of the solicitors that we are in regular contact with are reporting the same increase in transaction levels, however, it will be very interesting to see if this busy period will continue into the middle of 2016.’
Harrods Estates have several current new-build instructions underway where opportunities for bulk-purchase could be viable – such as Manhattan Loft Gardens in Stratford and Vista in Battersea. Simon Barry, Head of New Developments at Harrods Estates. Of particular note is that these are available below the £925,000 tipping point for the next cumulative STLD tier, so able to help keep the cost of purchase to a minimum.
Read our report on the Autumn Budget here
View properties for sale under £925,000 here