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UK Investors Rush To Beat Stamp Duty Hike

by Robert Lee,, London

21 January 2016

The Royal Institution of Chartered Surveyors (RICS) said the UK housing market has seen a rise in demand following the Government's announcement that it will introduce higher stamp duties for buy-to-let investors.

Under proposals announced at the Autumn Statement, the higher rates of stamp duty land tax (SDLT) will apply from April 2016 to purchases in England, Wales, and Northern Ireland of buy-to-lets and second homes that cost more than GBP40,000 (USD56,706). The rates will be three percentage points above the current SDLT rates, and will be charged on the portion of the value of the property that falls into each SDLT band.

The first GBP125,000 of the property price is exempt from stamp duty. A rate of two percent is payable on the portion up to GBP250,000, five percent on the portion up to GBP925,000, ten percent up to GBP1.5m, and 12 percent on the value above GBP1.5m.

The RICS said that the demand for new UK properties has reached a three-month high, with buyers rushing to beat the stamp duty hike. It added that since Chancellor George Osborne announced the measures in November 2015, 16 percent more chartered surveyors reported new buyer inquiries were rising.

RICS Chief Economist Simon Rubinsohn commented: "The housing market has experienced an unusually buoyant December. Those in the industry have been speculating that this is the result of the Chancellor's announcement last November. Potential buy-to-let investors are looking to pick up properties before the increased stamp duty levy comes into force next April. If that is the case then we can expect to see the housing market heating up further over the next few months."

In December, a group representing 250 landlords announced that it would seek a Judicial Review of the Government's planned reform of buy-to-let tax reliefs. From April 2017, the Government will gradually reduce relief for mortgage interest for individual landlords, to restrict it to the basic rate of income tax (20 percent). From April 2016, the wear-and-tear allowance, which allows landlords to reduce the tax they pay regardless of whether they replace the furnishings in their property, will be scrapped in favor of a new system that only provides relief when furnishings are replaced.

Steve Bolton, who is leading the campaign, said the Government had "chosen to just launch an attack on buy-to-let owner-operators with mortgages."

TAGS: tax | United Kingdom | tax thresholds | ministry of finance | tax rates | stamp duty | tax reform | trade association | trade

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