Everyone was prepared for the stamp duty changes which came in on 1 April 2016. We all understood that for second or subsequent homes there would be an increase of 3% tax and investors bought quickly to avoid the hike. However, it now seems that other purchasers have unexpectedly been caught out!
Since the stamp duty changes we have received a number of enquiries from clients and professionals, raising concerns that require a little more thought than simply an increase in tax.
How have stamp duty changes affected recent property transactions?
My first example is of two individuals who are not married and are buying their first home together. One individual already owns buy to let properties. My clients had expected to pay the ‘lower’ rates of stamp duty as this will be their primary home. But as one individual already owns property this is not the case. As they are only seen to be purchasing a second property and they are not replacing a main residence. As such they have had to pay stamp duty at the higher rate.
My second example is in a transfer of equity situation. One person is named on the title deed to a property and wishes to transfer this title to their partner. The current owner does not own any other property however, their partner (to whom the title is being transferred) does. In this instance the higher rate of stamp duty would again apply.
So you see the changes are catching more transactions than they were originally intended to and we continue to receive enquiries from concerned movers and investors.
You can read more about the stamp duty changes in our previous blog: “How could the changes to stamp duty rates for residential property affect your purchase?”