Stamp Duty Land Tax (SDLT) – Additional Residences

01 Apr 2016

The purchase of additional residential properties, such as second homes and buy-to-let properties, now attract SDLT rates 3 percentage points above standard rates. The table below shows the existing and new rates that will apply.

SDLT Aditional Residences table

For example the amount of SDLT payable on a £200k second property previously was £1,500 (0% x £125k plus 2% x £75k). Now the same transaction will attract an SDLT charge of £7,500 (3% x £125k plus 5% x £75,000).

Anyone buying a second home that isn’t their main residence will have to pay the higher rate. Whilst primarily aimed at the buy to let market it also catches parents wishing to buy property for their children and couples buying properties together where one or both already own a property that they are not intending to sell. Even a first time buyer in England and Wales will be caught if they already own a property abroad.

The treasury will also treat married couples, civil partners living together and non married cohabitees as one unit. This prevents a second property being purchased in the other partner’s name. It also means that any homes owned by either partner will be included when deciding whether the new charges apply. Therefore a couple buying a first home together will be caught if one of them already owns a property that they are not selling.

There are some exceptions that apply to caravans, mobile homes, houseboats and properties worth less than £40,000. In addition charities and registered social landlords will be excluded as will companies already owning 15 or more properties.

Note that if you are able to purchase a new home but cannot sell the old one at the same time you will have to pay the additional SDLT. However, if you sell the old main residence within 3 years you can claim the additional SDLT back.

You can read a fuller article here.