Stamp Duty on Second Homes

Various types of property transaction are affected by the new legislation, apart from buy-to-let and second home purchases, including properties being bought as investments, or as homes for family members, such as children, where the title to the property remains in the name of the parent(s). A couple purchasing a home together where one or the other already owns another property fall under the scope of the new rules, as do both British and foreign owners of overseas properties and holiday homes buying an additional property in England or Wales. It is also important to remember that the legislation can apply to home buyers who may not own, but have a financial interest in an additional residential property.

The higher rates (which are dependent on the bracket or band that each portion of the purchase price falls into) apply when, at the end of the day on which a new residential property is acquired, the purchaser owns or has an interest in two or more residential properties. This therefore affects buyers who complete on the purchase of a new home while still legally owning their previous property, as can happen when, for example, the sale of the latter property falls through at the last minute. However, in these circumstances, the extra SDLT paid can be reclaimed, provided that the original main residence is sold within the next three years (36 months), as it is then classified as having been ‘replaced’.

As we can see from this brief outline, the new rules related to the higher rates of SDLT on purchases of additional residential properties can be complex, and home buyers who are not buy-to-let landlords or purchasers of second homes can unwittingly find themselves facing a significant extra tax liability. There are also a number of exceptions to the rules (such as on inherited property), as well as transitional provisions, which can further complicate matters. Penalties for inaccurate SDLT filings can be severe, but are easily avoidable with the benefit of sound legal advice. Louise Nelson is a conveyancing solicitor with over 40 years’ experience handling residential property purchases, and can offer a free consultation on issues related to the new residential stamp duty rules.

Our conveyancing department can assist with sales, purchases, and transfers of residential property across England and Wales. We are experts at advising on stamp duty liabilities.