The 1st of April saw some changes to the Stamp Duty Land Tax, which affects property purchases across the UK. People who support this surcharge on second properties think that it will provide equal opportunities for those who want to buy a house to live in and those who are purchasing a second home as an investment. Other people, however, believe that while the idea behind it is well-intended, the new Stamp Duty brings with it serious concerns for homebuyers.
Why the New Stamp Duty?
The new Stamp Duty means that purchases of additional residential properties are subject to an extra 3% fee, on top of existing basic stamp duty rates. According to the Homeowners Alliance, this surcharge may lead to several issues that can seriously affect homebuyers.
The idea behind the new Stamp Duty is to help reduce the competition for first-time homebuyers, as fewer people are actually buying properties nowadays. Because supply has become more limited, rents have gone up in the past few years, which had the unintentional consequence of putting off aspiring homeowners.
Will You Be Affected?
If you already own a home and are looking to purchase a second property, you’ll be affected by this 3% surcharge. The purpose of this second purchase is irrelevant, which means that whether you’re buying a second home to let, to replace the one you currently live in or as a holiday property, you’ll always be subject to this new rate.
Concerns About this Surcharge
Many feel that the new 3% fee may force homeowners to give up on the purchase of their new home, as they were not counting on the new rates. On top of this, although a first-time homebuyer shouldn’t be affected by the new Stamp Duty, if he or she buys the property with someone who is already a homeowner, they’ll also have to pay the 3% surcharge.
For couples going through a divorce, one person will be affected by the surcharge if they purchase a new home. Also, many believe that pensioners will be hit the hardest, as if they move to a newly built retirement home they may be forced to pay the 3% increase.
It appears that not everyone is happy about the new Stamp Duty, as they feel it might have unintended consequences to both homebuyers and the real estate sector. If you’d like to know how this will affect you personally, or if you want to learn more about our financial services, don’t hesitate to contact a member of the Burton & Fisher team.