Stamp Duty on Investment Property

If you’re thinking of buying a second home, Buy-to-Let, or an investment property, were you aware that there is an additional 3% Stamp Duty Land Tax (SDLT) on top of the standard SDLT amount payable?

This regime was introduced in 2016, and since, the market for second homes has certainly felt the pinch, especially Buy-to-Let landlords, who are also being penalized with a reduction in the amount of mortgage interest that can be claimed against tax.

If you are in a fortunate enough position to be able to buy an investment property or second home, an average £250,000 purchase will cost you a whopping extra £7,500. This additional expense might ultimately have to be absorbed by the vendor, who 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 as purchase costs such as SDLT may not be included in any mortgage borrowing.

Nevertheless, property remains one of the most reliable investments available and we are continuing to see strong yields for the savvy investor in this area. The old adage of ‘not letting the tax tail wag to 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, which is generally regarded as good for the economy as well as socially (a recent study discovered that people in their 30’s who cannot get a foot on the property ladder are more likely to delay starting a family).

So if you’re selling, why not take advantage of our deep personal accountability, and 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 is, you can be assured that our local knowledge and property expertise will guide you through the process towards a successful outcome, irrespective of SDLT. Arden Estates help people move!