April 1st has arrived and with it the government's new stamp duty charges. From here on in, the percentage on each stamp duty band has risen 3% for second properties and buy to let landlords. George Osborne has confirmed however that initial plans to exempt significant investors from the three percent stamp duty charges have been abandoned.
In order to escape the rise in stamp duty, many buy to let investors had hoped to club together and purchase multiple properties through a single company to avoid extra tax, therefore making them a 'significant investor'. But following Osborne's announcement that loophole has closed.
"The key to selecting any investment starts with due diligence. Securing properties at the right price will be more important than ever" claims Purplebricks Lettings Director, Richard Jacques. "Landlords will then need to establish the most cost effective way of managing their returns, this will include their chosen method of finding tenants and associated property management".
Other charges that have come into effect include the scrapping of the 'wear and tear' allowance which has been replaced with a tax relief for landlords replacing furnishings.
Finally, it was recently revealed that 90% of landlords are unaware of the government's right to rent scheme that was introduced on the 1st February. The scheme encourages landlords to check the immigration status of new tenants - those who don't will face a fine of up to £3000 per illegal tenant. For more information on the right to rent scheme, CLICK HERE.
New Stamp Duty Fees:
|Property Value||Stamp Duty Rate For Owner - Occupiers||Stamp Duty Rate For Second Property/But To Let|
|Up to £40,000||Zero||Zero|
|The next £85,000 (the portion from £40,001 to £125,000)||Zero||3%|
|The next £125,000 (the portion from £125,001 to £250,000)||2%||5%|
|The next £675,000 (the portion from £250,001 to £925,000)||5%||8%|
|The next £575,000 (the portion from £925,001 to £1.5m)||10%||13%|
|The remaining amount (the portion above £1.5m)||12%||15%|
- 1 April 2016