The government has extended the period before the higher stamp duty rate will apply to second homes, and the time in which homeowners can claim a refund, from 18 months to 36 months.
This will give those who have an overlap between two properties or are “moving in difficult circumstances” longer to dispose of their main residence.
In the Budget documents, the government confirmed that there will be no exemption from the higher rates for significant investors, and that higher rates will apply equally to purchases by individuals and corporate investors.
The government will provide £60 million of the additional receipts from higher rates on additional residential properties to enable community-led housing developments, including through Community Land Trusts, in rural and coastal communities where the impact of second homes is particularly acute.
Higher rates of Stamp Duty Land Tax will apply to purchases of additional residential properties, such as second homes and buy-to-let properties, from 1 April 2016.
Eddie Goldsmith, Chairman of The Conveyancing Association, commented:
“We welcome some of the clarity provided today. The doubling of the time individuals have to dispose of their main residence, and the time they have to claim a refund, up from 18 to 36 months is welcome, as the selling timeframe can be long for many vendors. The decision to not treat married couples, who are living separately, as one unit is also a positive step – we believe this would have stopped individuals who are living apart from purchasing a main residence just because they are on the deeds of their former home.
“There is also a positive statement being made here about the responsibility purchasers have for ensuring their SDLT return is correct, and the onus is not being put on the conveyancing profession to play policeman when it comes to who is responsible for ensuring the return is right. That said, the conveyancing profession now has less than three weeks to prepare itself for these changes – a time period which is completely inadequate given the increased level of transactions this policy has caused, and the fact we are already dealing with the traditionally busy Easter period. One wishes that the Government could have considered the work required by conveyancers in order to put the correct systems and processes in place.
“Overall, we are also slightly disappointed that the measures have not been watered down as we believe they will have a significant impact on the smaller landlord in particular who may now leave the private rental sector resulting in a widening of the housing gap. The exemption that was to be supplied to larger investors – previously set at those who owned 15 properties or more – seemed completely aribitrary and, in the pursuit of fairness, it seems completely appropriate that this has been scrapped. The true result of these measures, and their impact on overall housing market activity, remains to be seen but we suspect there will certainly be a tailing-off in buy-to-let purchases for some time to come.”