Chancellor adds significant costs to second home and
The Chancellor of the Exchequer, George Osborne, has made some significant announcements affecting the housing market in his Spending Review announced in the Commons.
One thing to particularly bear in mind right is the introduction of an additional surcharge of 3% from next April on Stamp Duty for the purchase
of buy-to-let and second homes, unless they are for 'corporate development
The existing rates of Stamp Duty for properties above £125,000 are:
Up to £250,000: 2%
£250,001 to £925,000: 5%
£925,001 to £1.5m: 10%
Above £1.5m: 12%
For second home/buy to let purchases, a new band of £40,000 to £125,000 at a rate of 3% is being introduced, so with this plus an additional 3% applied to the pre-existing bands, the purchase of a house for £300,000 for letting or as a second home will cost an additional £7,800 in stamp duty and one for £600,000 an extra £16,800 from April.
This is the second big change to Stamp Duty following reforms announced a year ago when it became a graduated tax, increasing costs for higher priced homes which is blamed for a quietening of the London property market.
Peter Watson FRICS, Managing Director of Flick & Son, said: “Government interventions in the property market always have consequences, particularly when a Government announces changes in advance of a specified date such as for this stamp duty surcharge of 3%. The obvious impact is there may be a rush to purchase buy to let properties and second homes in time to avoid the increase which may temporarily push values yet higher."
"Suffolk’s Heritage Coast and the towns and villages around it are popular second home destinations and so the impact will be felt in this area as much, if not more than most other areas. This announcement comes at a time when there is a distinct shortage of available property to purchase and the added pressure to complete a purchase by April next year is bound to temporarily push values yet higher. Markets have a tendency though to soak up and adjust to changes such as this and the likelihood is that the market will adjust and that property purchases for second homes will go on as before, albeit the impact on buy to let purchases may be more significant."
"There is no doubt that the Government is sending a signal that buy to let purchases are now being financially targeted by the Government, heralding a major change in attitude and policy, which in my view will cause potential buy to let purchasers to stand back and re-think their investment strategies. If buy to let purchasers do withdraw from the market in significant numbers and if they’re not replaced by first time buyers and other owner-occupiers able to purchase properties at current prices, then it is inevitable that prices will fall back as
Flick & Son's experienced team will closely monitor reaction and the consequences of this announcement by the Chancellor so you can receive the best informed and accurate advice when it comes to putting your property on the market with us.
The immediate short term advice has to be that if you are thinking of selling
a property now is the time to get going with the sale, regardless of whether
or not you think that your property is going to attract a second home or
Purchasers seeking a buy to let property or a second home will be desperately keen to find a suitable property without delay as, with it taking some 3 months plus from initial marketing to completion of a sale, the deadline of April 2016 gives very little time in which to act and avoid the hike in Stamp Duty.
So if you are thinking of selling your property, please contact us or drop in to
any of Flick & Son's five branches on the Heritage Coast for the best advice in the area.
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