The old nursery rhyme One Potato, Two Potato, Three Potato More has been applied by the Government but peel back the skin and the filling of this potato is much more costly than cheese and beans.
As of 1 April 2016, if you are purchasing an additional residential property, then you are likely to have to pay an extra 3% Stamp Duty to the Government.
Designed by the Government to stem the flow of buy to let Landlords which the Government feel pushes up prices and limits the ability of first time Buyers to buy property coupled with other Government First Time Buyer Initiatives, they feel that the property market in relation to buy to let needs to be curtailed.
Following the Autumn Statement in November 2015, the Chancellor proposed anyone buying an additional residential property either as a buy to let, holiday home, or a new residential dwelling, if you are not also selling your existing main residential dwelling would pay the surcharge. Following representations and consultations by professional bodies, the Government proceeded with the proposal and indeed, the rules are complex and rigid and you will be caught even if you and a partner are buying your first property together and one of you owns a property anywhere else in the world. There is no question of seeking to artificially flip / change your main residential dwelling, just as some MP’s allegedly once did when electing to claim expenses.
So What are the Stamp Duty Rates ?
So, if you are looking to get on the property ladder as a buy to let Landlord, that flat you have in mind at £195,000 which would originally have cost you £1,400 in Stamp Duty will now cost you £7,250. You are giving the government the equivalent cost of a new car.
However the increase does not apply if you are selling your existing main residential dwelling and replacing it with a new residential dwelling. If at the end of the transaction, you still only have one main residence. The rules are complex and there are few exemptions and therefore if you have any questions, please speak to a member of the Residential Property Team, who will be happy to assist.