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  • Mortgages & Finance

    Prepare now for buy-to-let stamp duty changes in 2016

    Stamp duty changes for buy-to-let purchases

    In his Autumn Statement, the Chancellor announced that higher rates of stamp duty will be charged on property purchased for buy-to-let purposes (above £40,000). This change will come into effect on purchases that complete from midnight on 31 March 2016. The higher rate of stamp duty for buy-to-let purposes will be 3 percentage points above the current stamp duty rates and will represent a significant cost for buyers.

    What you can do to get ready

    Whether you are purchasing a property or raising funds to facilitate a purchase of another property, it is important that you understand how this change could affect you. If you are arranging a buy-to-let mortgage with Property Tribes Mortgages, please ensure that you provide us with all the information we need to process your mortgage application as early as possible.

    Allow sufficient time

    Please remember that even after we have received all the information for your mortgage application, lenders will need time to carry out some essential checks, including the assessment of the subject property before the mortgage can be approved. In addition, as we could see a higher volume of applications over the next three months, it might be difficult for lenders to keep within standard timescales.

    Once we have received the information for your case, we will do everything we can to help facilitate the transaction before the end of March. However, we can't guarantee that we will be able to help you meet the deadline and you should be aware that it will be your responsibility to cover the additional stamp duty charge if the mortgage completes after the deadline.

    Getting support


    Please contact us if you require any further information or an update on your application.

    Mortgage Support Team
    Tel: 029 2069 5480
    Email: info@propertytribesmortgages.co.uk
    Web: http://www.propertytribesmortgages.co.uk
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    Hello,

    That's good information, thank you.

    I was just wondering, I myself have a few BTL properties and have just sold my residential property. My partner has never bought a property and therefore would be a FTB. We are soon to get married, will the 3% charge be applicable when we decide to buy together (will have to buy together to get the mortgage we need).

    Thanks
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    If you are purchasing a buy-to-let property and the mortgage transaction completes after 31 March 2016, then the additional 3% stamp duty charge will apply.
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    We would be purchasing a residential together and it would not be a BTL. Does that mean it would not affect us?

    Thanks,

    Pp84
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    The additional 3% stamp duty only affects buy-to-let property purchases so does not apply to residential properties.
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    I thought it affects resi as well, if the buyer is not FTB.
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    It applies only to residential properties that are bought as a second home, not primary residences.
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    (11-01-2016 03:40 PM)Property Tribes Mortgages Wrote:  It applies only to residential properties that are bought as a second home, not primary residences.

    So, if one has a main residence and wants to buy another residential property worth say over £200K (after 1 April) to have as main residence, then no extra 3% stamp duty is due? Is that right?
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    Can someone please correct me on this as I read it that the current home I am in, decide to buy a new home to make it my primary residence can I then let my current home and move into the new home without paying the 3% stamp duty if the new home is under the £125,000? And if I decided to move in 6 months to a new property purchased, and rent out my second primary home, then again no stamp duty 3% would be payable if under £125,000? Could this repeated or is this restricted? As new purchases are for primary residence each time.

    Thank you for your help with this questions
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    Nope my understanding is that ALL 2nd properties no matter what they are intended for will incur the additional 3% SDLT
    However if the previous property is sold within 18 months then the additional 3% SDLT will be reimbursed
    Now to me if that is the case
    Then I would be inclined to retain the previous property and rent it out and then sell 18 months later

    Obviously the mortgage if any on the previous property would have to be converted to a LTB as presumably a residential mortgage would be used for the newer 2nd property!?

    However there would seem to many complications to this mortgage scenario etc which a mortgage broker would be best placed to advise on.
    As yet it seems the SDLT regulations haven't been fully devised
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    (22-01-2016 07:22 AM)paul_barrett Wrote:  Nope my understanding is that ALL 2nd properties no matter what they are intended for will incur the additional 3% SDLT
    However if the previous property is sold within 18 months then the additional 3% SDLT will be reimbursed
    Now to me if that is the case
    Then I would be inclined to retain the previous property and rent it out and then sell 18 months later

    The big danger there would be if you went over the 18-months-to-sell timeframe by even 1 day, you would no longer be able to get your 3% SDLT back.

    The proposal as it stands works like this:
    If, at the end of the day you buy your residential property (as in, not commercial, ie irrespective of whether you're going to live in it or not), you own more than one property AND you haven't replaced your PPR with the new one at the same time (ie sold your old one that day as well), then you ARE liable for the extra 3% SDLT on the WHOLE purchase price (not just from 125K up), unless the price was less than 40K. If the new property is your new PPR and you sell your old one within 18 months, you can claim a refund of the extra 3% SDLT you paid.

    Of course, as has been pointed out, this may change after the consultation. Hopefully we'll find out in the March budget.
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