Agencies and other headaches, keys and cleaners, running costs and contracts...in short, all the things we spend so much of our time doing behind the scenes.<br>
Should this thread be made sticky for a while so all LMH members are made aware of the issues? I don't know how that happens, who can do it, etc but it is quite an important issue for those planning to grow their FHL business.
Last time there was a consultation on FHL vs BTL, I responded directly to the consultation, and also via the Visit Britain reps and my local MP. The EASCO route is also interesting.
A quote from the statement which offers more clarification can be found under the heading
Opportunities for home ownership: Five point plan
"5) 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. The higher rates will be 3 percentage points above the current SDLT rates. The government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute. The tax receipts will help towards doubling the affordable housing budget. This will help first time buyers."
Thus my personal interpretation is that the chancellor is not interested in whether the property is a BTL or FHL - if it could have been someone's primary home residence then it will be penalised. He is looking to support home buyers, not investment or business.
zebedee wrote:A quote from the statement which offers more clarification can be found under the heading
Opportunities for home ownership: Five point plan
"5) 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. The higher rates will be 3 percentage points above the current SDLT rates. The government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute. The tax receipts will help towards doubling the affordable housing budget. This will help first time buyers."
Thus my personal interpretation is that the chancellor is not interested in whether the property is a BTL or FHL - if it could have been someone's primary home residence then it will be penalised. He is looking to support home buyers, not investment or business.
It's a possibility. However, a FHL is not a residential property as it may never qualify as a residential dwelling under planning restrictions, or it's the subject of a Change of Use authorisation. But then the confusion arises if a property is bought as an existing dwelling with a view to changing its use to a FHL........
Perhaps it might act as a deterrent to those looking to buy a second home primarily for their own use, but letting it at unrealistically low rates just for a bit of pin money? Or maybe not......
Yes, you may be ok if you have a purpose built holiday let, but possibly only really protected if you build on your own land then the stamp duty issue wouldn't arise at all!
I suspect though, many many people have FHLs which have been residential properties at some time (including me). Just think about how many estate and farm workers cottages have become FHL as farming has become more mechanised? Both Yorkshire and Cumbria are full of FHLs that were once ( perhaps many years ago) residential properties (am beginning to feel very guilty now). I am sure it is the same in other holiday areas such as Devon and Cornwall.
In the long term, I think people will just get used to the idea and buy anyway. I don't always fully understand some of the taxes paid by LMHtters in France and Spain mentioned in other threads, but they can sound horrendous.
I think people will just get used to the idea and buy anyway
You may be right, but this just exacerbates the problem, playing into the hands of those businesses with the funds to essentially ignore the new tax or recover the increase in purchase cost via increased rental rates.
During my search for an additional FHL property I have come across the 'Devon covenant' assigned to some properties, which require prospective purchasers to have lived in &/or worked in Devon for the last 3 years. This is designed to protect locals from being priced out of the market by wealthier BTL-ers.
Perhaps an extension/alteration of this approach, rather than a broad-brush SDLT tax increase, would enable local authorities to better manage the growth of FHL tourist accommodation in less popular areas or limit growth in saturated areas, rather than risk choking off tourism growth, and all its incumbent benefits, across the entire region.
This is fascinating for me. i grew up in Devon and saw our local area gradually losing both light industry and a large holiday camp leaving the local economy very depressed. I left the area to go to college and stayed in the South East, where the work was.
A few years ago we bought a house in Devon to use as a base for visiting family, a holiday let and, long term, so we could eventually move back. In the meantime I'm very aware that we've taken a potential home out of the market. Local people struggle to afford homes and there are a lot of second homes and FHLs. I don't know if anyone local would have bought the house eventually (it needed a lot of work).
On the plus side tourism seems to be reviving which in turn is creating employment, all be it very seasonal.
I'm all in favour of the tourist industry contributing to the local economy and if the extra stamp duty is going to mean more investment in housing for local people then it seems like a sound idea.
Jo
Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
We had the privelage of living within the Peak District National Park for a few years. Second homes, holiday lets, people retiring was a major problem in the many small villages, with schools and shops closing, communities basically dieing as locals were priced out the market. Most locally available jobs would be fairly low wage! One sensible idea was requiring planning permission to be able to 'convert' a residential home to either use as a 2nd home or holiday let! That way there would be local control on the number of such properties in any one area. Seemed like a good idea![/i]
If FHL are included, it won't just impact those purchasing additional FHL properties in the future but also if you EVER wish to move home yourself your new home would in effect be a 2nd + property?
This is the issue we are struggling with at the moment. We have an apartment as a holiday let but are looking to move ourselves next year and assume we will take the 3% hit on our own (higher value) new home as it will be the 2nd home we own.
Seriously worried about it as in our area family homes are £400-£500k so that will mean saying goodbye to an extra £15k in stamp duty that we had not budgeted for.
I think you are worrying unnecessarily. Your main home or residential home is just that. If you want to sell and buy a new main / residential home then the residential home rules apply.
Provided you have been managing your holiday let apartment properly,ie keeping books, submitting tax returns (even having it listed for business rates?) then what you are doing is entirely transparent and you will only pay standard stamp duty fees on your residential home when you buy your new one.
If you think about capital gains tax, this also applies if you sell your FHL but not your main residence.
The chancellor is looking to penalise people taking properties out of the residential pool for political reasons (housing demands, and frankly, because he can penalise anyone he likes if he thinks he can get away with it). If you were looking to swap your FHL flat for a FHL house, then you would pay the additional stamp duty on the new property even if you sold your FHL flat to someone who was going to to live in your FHL flat as their main residence.
I always thought it was the buyer who paid the stamp duty not the seller?
If you sell your main residential home and move into your ex-holiday let. Your main home buyer would pay standard stamp duty and you'd be exempt from capital gains tax. Your FHL would then become your main residence.
The new rules only apply to new purchases; if you already have the two homes with mortgages, moving from one to another and then renting out the first doesn't attract stamp duty.
"Write something, even if it's just a suicide note"
"There is no human problem which could not be solved if people would simply do as I advise"
"As for my amnesia, I've had it as long as I can remember"
Real name: Steve
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zebedee wrote:I only talked about stamp duty in the context of the buyer paying
Sorry Zebedee I was responding to Kate24 and should have quoted her to avoid confusion.
"Write something, even if it's just a suicide note"
"There is no human problem which could not be solved if people would simply do as I advise"
"As for my amnesia, I've had it as long as I can remember"
Real name: Steve
Gender: Male
Essar, yes it is the purchaser who pays stamp duty. Apologies, I should have clarified our situation as it is rather confusing.
We have an FHL apartment that we have owned and lived in for the previous 8 years that we moved out of last year and let (well, just about to start) and we are currently renting a home ourselves. Next year we plan to buy our own home, moving out of our rented house, and retaining our apartment as a holiday let. I was/am concerned the new home we buy next year would be the 2nd property that we own and would therefore be liable for the additional 3% stamp duty even though we were not buying it to let, but to live in. I guess it depends on how they determine 2nd property. I hope zebedee is correct - I think it would cause a lot of problems if they did not let people nominate a primary residence.
and my local MP. The EASCO route is also interesting.
