Following new reforms to stamp duty tax announced by Chancellor George Osborne in the 2016 Budget, anyone purchasing a second property will now be required to pay an extra 3% stamp duty.
The idea behind the policy change is to free up properties to ease the buy-to-let market and to make it easier for first-time buyers who are discouraged by higher fees.
The new rules apply to companies and individuals regardless of how many properties are being purchased - anyone owning a second property that isn't their main residence is likely to get caught up in the changes.
But what does it really mean for landlords and those investing in property?
It will certainly be interesting to see how the stamp duty changes coming into effect will impact the market. The new 3% surcharge is just another thing that property investors will have to factor in to their decision-making, and could deter purchases such as holiday homes, or parents buying a property for their children.
However, we don’t see this as the beginning of the end of buy-to-let. For those serious about continuing to invest in property, due diligence will be key. In fact, 61% of the landlords we work with told us that the new stamp duty changes won’t affect their investment goals. Many feel that as long as the yield is still strong enough to make a healthy profit, the investment will still be worthwhile. Instead, purchasing at the right price, and ensuring that property management is cost effective, will be more important than ever for future investing.
And for those not necessarily intending to own two properties at the same time, it’s also important to note the last minute changes that came into effect last week. Now, where a house sale hits delays, home owners will have 36 months to claim a refund on the Stamp Duty surcharge – instead of the 18 months outlined in the original proposal.
For more information about our investment service at Purplebricks, please email firstname.lastname@example.org or call 0121 296 4844.
- 8 April 2016