Will Property Chains Fail on Stamp Duty Increase

Will Property Chains Fail on Stamp Duty Increase?

Fears are rising in the property market that the introduction of the additional 3% Stamp Duty Land Tax (SDLT) levied on buy to let properties worth in excess of £40,000 from April 2016 could actually trigger those involved in property chains collapsing.

There are two reasons for this:

• If the property purchase does not complete before April then a buy to let purchaser could pull out of the sale given the increased costs.

• In addition, many people who are downsizing such as pensioners could find themselves still owning their main residence and therefore having to pay an additional 3% on any new smaller property that they are trying to buy before the sale of their main residence completes. This is simply an additional cost burden when buying your new residential home if you have not sold your existing home.

Comment

We understand that the government has recognised this problem and is prepared, within the draft legislation, to allow a short time period between the sale of the property and the filing of the stamp duty land tax return for any existing property to be sold meaning that for a short period of time you could own two properties but provided the larger property that you were downsizing from was sold before the stamp duty return is completed i.e. within a few days then you will still be allowed to pay normal stamp duty rates rather than the additional 3% charge.