Stamp duty levy

[zebedee]

The chancellor has announced today a 3% levy on stamp duty for buy to lets and second homes from next April.

[brightmike]

I only read the news headlines.

I currently own a second home (holiday let) and I'm in the process of selling my "first" home, hopefully this year. If I buy a new home to live in after April will this count as a second home since I would already own the first home as a holiday let?

Hopefully that is not too confusing to read

[e-richard]

Obviously the devil is in the unpublished detail, but as I understand it, if the new house that you buy is the one you intend to live in as your main residence, then it's not a second home.

YES, it does seem that there is room for fraud here, but is it any different from the rules for CGT when you sell your main or secondary home ?

[brightmike]

Thanks Richard, that makes sense. I will check it out with my conveyancing solicitor closer to the time although hopefully I will have moved before April. Fingers crossed.

[rigmover]

Check out No9

http://www.propertytribes.com/irrefutab ... 21548.html

[e-richard]

Check out No9

http://www.propertytribes.com/irrefutab ... 21548.html

That article was written 3 months ago and refers to unspecified "tax changes". I doubt the author was a clairvoyant and what may possibly have been applicable then is not what is under discussion here.

Its nearly as dangerous to rely on poorly documented articles on the Internet as it is to believe anything I write about applicable UK law on LMH

[zebedee]

You can read more details here

http://www.landlords.org.uk/news-campai ... t-briefing

[Gary2604]

Don't know how they are going to police this! What happens if you buy a home to live in then 6 months later decide to rent?

[zebedee]

I would imagine it is going to be up to the conveyancing solicitors. I believe (but happy to stand corrected) that mortgage companies are less likely to give you an ordinary mortgage if you are going to let out the property eg as holiday let than they once were.
If you decide to let out 6 months later then you are supposed to get permission first from the mortgage provider. Of course if you can pay cash for your property then no problem. Personally, I wouldn't mess with the tax man!

This all appears a knee jerk reaction and a bit of a tantrum because of having lost the tax credits battle, although the huge amounts of money received from housing benefit by some London landlords has made landlords a target for a while.
This tax is designed to hit the landlords with increasing property portfolios, and possibly also because many people cashing in their pensions under the new rules are investing in property so the tax man gains twice - first from the tax revenue from you releasing your pension funds, and then when you invest in buy to let.
Although anyone who already owns their property appears unaffected, it is possible that when you come to sell there are fewer people interested in buying from you, or expecting a lower price if they are buying your property as a second home or BTL.

[Gary2604]

One of Osborne's main reasonings for the introduction of this buy to let stamp duty was the number of foreigners investing, presumably in London but they will be cash buyers.......so how will they control this...or are we going to see HMRC knocking on doors to see who is or is not living there

[zebedee]

Good point . Let's hope so.

[russellt]

Is it not the case that if FHL businesses comply with HMRC's FHL conditions, the assets of the business are treated as business assets and not as investments a la BTL?

I'm in the process of adding another property to my FHL business and would like to understand this change in more detail. Do you think the difference between FHL and BTL property is sufficiently clear, ie one a business asset and the other an investment.

I wonder how the new stamp duty rules will be applied (or not, as the case may be), ie who will be the gatekeeper. Anyone read anything definitive about that?

[zebedee]

If you follow through the links from my previous post you can find the actual spending review document which states that the review

"supports families buying their own home through a 3 percentage point surcharge on rates of Stamp Duty Land Tax on purchases of additional properties like buy to lets and second homes"

[russellt]

Yes. So, I am trying to understand if this community views FHL as different from BTL and holiday homes(purely for personal use). I do, and have argued the case in previous government consultations.

additional properties like buy to lets and second homes

The word "like" is mischievously open-ended, IMHO.

[greenbarn]

Yes. So, I am trying to understand if this community views FHL as different from BTL and holiday homes(purely for personal use). I do, and have argued the case in previous government consultations.

additional properties like buy to lets and second homes

The word "like" is mischievously open-ended, IMHO.

All very weasel worded and possible cause for concern. Obviously this has been picked up by the English Association of Self Catering Operators (EASCO), whose latest newsletter includes:

The words of the full statement were: “
Higher rates of Stamp Duty Land Tax
(SDLT) will be charged on purchases of
additional residential properties, such as buy
to let properties and second homes, with
effect from 1 April 2016.” This is clear as far as
residential landlords are concerned and also
second homes, but business premises such as
holiday homes may not be included as they
are not “residential properties” – nobody
resides there. EASCO understands that there
will be a government consultation early in
2016 on the fine detail and we will of course
be making the case that holiday
accommodation should not be taxed in this
way. As so often we will need to ensure that
politicians do not confuse holiday homes with
second homes.

I imagine that most, if not all, owners of properties in England (there are equivalent and co-operating bodies for Wales and Scotland) are already members of EASCO, but if not I'm sure they'd appreciate any extra support in acting as our champion against yet another piece of "oops we hadn't thought of that" government legislation affecting FHLs. (Remember the great Energy Performance Certificate fiasco? It was EASCO's engaging a specialist barrister that finally highlighted the legal errors and misconceptions in the government's attempted enforcement of EPCs on FHLs.)