Stamp Duty changes in November are you impacted?

Year Published: 2018

On 27th November 2018 the criteria for the “replacement of previous main residence” exemption from higher rates of Stamp Duty for purchases of additional residential property is changing. This is of particular relevance to anyone who owns residential property as investments or buy-to-let’s, has previously sold their main residence and is currently living in rented accommodation.

Tom Coulson, Property Paralegal at SAS Daniels Macclesfield Stamp Duty

Tom Coulson, Property Paralegal

Introduced on 1st April 2016, higher rates of Stamp Duty Land Tax (SDLT) impose an additional 3% surcharge on the usual rate of SDLT on the purchase of a residential property where the purchaser already owns another residential property.

One of the exemptions to the higher rates is the “replacement of previous main residence” exemption applicable where the property being purchased is intended to be used as the purchaser’s main residence and:

a) there is a sale of the purchaser’s previous main residence which takes place on the same day; or
b) there has been a sale of the purchaser’s previous main residence at any point prior to the date of completion of the purchase providing the purchase takes place on or before 26th November 2018.

For additional residential property purchases from 27th November 2018 onwards, the exemption will be applicable where the property being purchased is intended to be used as the purchaser’s main residence and:

a) there is a sale of the purchaser’s previous main residence which takes place on the same day; or
b) there has been a sale of the purchaser’s previous main residence within the 3 years up to and including the date of completion of the purchase.

Therefore, for any purchasers of additional property (which is intended to be their main residence) where a previous main residence was sold prior to 27th November 2015, there is a deadline of 26th November 2018 to complete the purchase without incurring the 3% surcharge.

Could I be impacted by the Stamp Duty changes?

The previous main residence must have been the purchaser’s only or main residence at some point prior to the purchase of the additional property.

See below some examples:

  • Scenario 1
    Purchaser P owns 3 buy-to-let properties. P is to complete the purchase of a property on 26th November 2018. P sold their previous main residence (A) prior to 27th November 2015. Since this date, P has lived in rented accommodation as their main residence. P can use the exemption to the 3% surcharge as the purchase property is a replacement of the previous main residence (A).
  • Scenario 2
    Purchaser Q owns 3 buy-to-let properties. Q is to complete the purchase of a property on 26th November 2018. Q sold their previous main residence (B) prior to 27th November 2015. Since this date, Q has lived in rented accommodation as their main residence but has also for a brief period lived in one of the buy-to-let properties (C) as their main residence. The buy-to-let property (C) at that time became their main residence replacing the one previously sold (B). Q does not therefore qualify for the exemption to the 3% surcharge.
  • Scenario 3
    Purchaser R owns 3 buy-to-let properties. R is to complete the purchase of a property on 27th November 2018. R sold their previous main residence (D) prior to 27th November 2015. Since this date, R has lived in rented accommodation as their main residence. R does not qualify for the exemption to the 3% surcharge as they have missed the deadline.

For more information and advice on Stamp Duty when purchasing or selling a house, please contact Tom Coulson in our Residential Property team on 01625 442166.

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