Stamp Duty on Investment Property

Stamp Duty on Investment Property

“Stamp Duty on Investment Property”

Are you buying a second home, Buy-to-Let, or investment property? Then you should be aware that there is an additional 3% Stamp Duty Land Tax (SDLT).  This is in addition to the standard SDLT amount payable.

Since this regime was introduced in 2016, the market for second homes has certainly felt the pinch, especially for Buy-to-Let Landlords.  These same Buy-to-Let Landlords are also being penalized with a reduction in the amount of mortgage interest that can be claimed against tax.

Certainly, if you are in a fortunate enough position to be able to buy an investment property or second home, then yes, an average £250,000 purchase will cost you an extra £7,500.  This additional expense might ultimately have to be absorbed by the Vendor, as he/she may have to accept a lower offer than expected, as the investment buyer will have less in their pocket.

A further frustration for investors is that the extra money may have to be found in cash if the additional amount pushes the buyer over their Loan-to-Value ratio.  Purchase costs such as SDLT may not be included in any mortgage borrowing.

A reliable investment…

Nevertheless, property remains one of the most reliable investments available.  We continue to see strong yields for the savvy investor in Brighton & Hove.  The old adage of “not letting the tax tail wag the investment dog” is probably worth considering!

The upside is that First Time Buyers – who often have to compete with the spending power of Buy-to-Let investors – will find themselves in a much stronger relative buying position.  This is generally regarded as good for the economy, as well as socially. (A recent study discovered that people in their 30s who cannot get a foot on the property ladder are more likely to delay starting a family).

If you’re selling, why not take advantage of our deep personal accountability?  Let us find you precisely the right buyer for your type of property.  It might be a private purchaser, a corporate relocation or an investor.  Whichever it turns out to be, you can be assured that our local knowledge and property expertise will guide you through the process towards a successful outcome, irrespective of SDLT.

We help people move, so let’s talk property on 01273-735237!