07.12.2015

If you’re looking to invest in buy-to-let property or a second home, you need to move quickly to avoid paying out thousands of pounds extra in tax.

The Chancellor’s Autumn Statement has delivered the bad news that, as of April 2016, a 3% surcharge on stamp duty for some second properties will be levied.

This would have affected more than 160,000 buyers had it applied in 2015. In real, hard cash terms it will mean an extra £5,520 of tax will have to be paid when buying the average £184,000 buy-to-let property; £7,500 will be added to the cost of buying a £250,000 property; and £15,000 to one worth £500,000.

This is the second big change to stamp duty, after reforms announced a year ago which affected the higher end of the property market, and aims to raise a further £1bn by 2021.

Money will be spent to try and bolster home-ownership in England and Wales, alleviating what Mr Osborne calls ‘a crisis of home ownership among young people’. On the back of this, the government aim to reduce the housing benefit bill and minimise what they see as a risk to financial stability following the recent boom in the buy-to-let market.

Buy-to-let lending has rocketed by 40 per cent since 2008 – faster than any other type of loan – and the Bank of England warned its popularity could exacerbate any housing crisis as these types of borrowers take out bigger loans during a boom, and tend to sell more quickly during a bust.

So, what does it mean for those considering buy-to-let property investment, existing landlords wanting to extend their portfolio or those wanting a holiday home? They will certainly have to re-evaluate the costs involved.

It could also have huge implications for those trying to take advantage of new pension freedoms to buy a property that might provide them with an income in their final years. Or families who see a second home as an investment for their children’s futures.

The Daily Mail shared some interesting cost comparisons and case studies in their article ‘Our buy-to-let dreams are in ruins!’

If at all possible, our suggestion would be to get in quick before the stamp duty rise hits! If it is financially viable to buy before April, we can help you complete before the deadline.

For further information or advice on any house purchase, contact one of our residential conveyancing experts.