Stamp Duty on Investment Property!
Posted on Wednesday, August 9, 2017
If you’re buying a second home or investment property, you should be aware that there is an additional 3% Stamp Duty Land Tax (SDLT) on top of the standard SDLT amount payable. Since this regime was introduced about a year ago, the market for second homes has certainly felt the pinch, especially for buy to let landlords who are also being penalized with a reduction in the amount of mortgage interest that can be claimed against tax.
Certainly if you are in a fortunate enough position to be able to buy an investment property or second home, then yes, an average £250,000 purchase will cost you an extra £7,500. This additional expense might ultimately have to be absorbed by the vendor, who may have to accept a lower offer than expected, as the investment buyer will have less in their pocket.
A further frustration for investors is that the extra money may have to be found in cash if the additional amount pushes the buyer over their Loan-to-Value ratio as purchase costs such as SDLT may not be included in any mortgage borrowing.
Nevertheless, property remains one of the most reliable investments available and we are continuing to see strong yields for the savvy investor in this area. The old adage of “not letting the tax tail wag the investment dog” is probably worth considering!
The upside is that first time buyers–who often have to compete with the spending power of buy-to-let investors, will find themselves in a much stronger relative buying position, which is generally regarded as good for the economy as well as socially. (A recent study discovered that people in their 30’s who cannot get a foot on the property ladder are more likely to delay starting a family).
So if you’re selling, why not take advantage of our deep personal accountability, and let us find you precisely the right buyer for your type of property. It might be a private purchaser, a corporate relocation or an investor. Whichever it is, you can be assured that our local knowledge and property expertise will guide you both through the process towards a successful outcome, irrespective of SDLT. We help people move!