Increased Stamp Duty Land Tax (SDLT) charges on Buy-to-Let residential properties or second homes is set to be introduced on 1st April 2016.

David Johnson, Partner and Head of Residential Property explains.

Plans to increase SDLT by 3% were announced in the Chancellor’s 2015 Autumn Statement and form part of the government’s wider housing plan to re-focus support for housing towards low cost home ownership for first time buyers.

The final detail is to be released on 16 March but the higher rate of SDLT is expected to be payable on properties priced between £40,0000 – £125,000 which would ordinarily be exempt from SDLT charges.

Purchasers will need to determine whether they have replaced a ‘main residence’ if they own two or more properties at the end of the day of the transaction. The government is expected to be extremely strict on the term ‘main residence’. Those looking to purchase a second property as a main residence which completes before the sale of their first property main residence will be liable for the increased SDLT charge upon purchasing, but will be able to claim back the higher rate SDLT  should the first property be sold within 18 months.

The Government is committed to accelerating housing supply and wants to see more homes built. It remains to be seen whether this increase will help to achieve that aim. There’s an argument that it’s a disincentive to investment in housing and will have a negative impact on housing supply. We’ll see how this develops.