One of the most significant announcements during the Autumn Statement 2015 was in relation to an increase in SDLT payments for property investors and second home owners. One year on, could there now be a dramatic turn of events on the horizon?
Since its introduction in April 2016, the additional SDLT charge was the subject of much controversy. Many experts in the property field said it could fuel a further housing shortage in the rental market as investors sought alternative opportunities. It was thought that London in particular would suffer even more so, as it could drive up rents in the long term.
Shortly after its introduction, the Government announced some changes to the rules to exempt certain purchasers of properties. Known colloquially in the press at the time as “Granny Flat Buyers” – or purchasers of property that had more than one unit, such as an annexe – were treated as if they were buying a second home and were therefore liable for the additional SDLT payment. The costs were significantly different, adding around £6,000 to a £200,000 property.
Following an outcry from the general public, the Government changed the rules so that the higher rate of SDLT only applied if the additional home is worth at least a third of the total price being paid. It was hoped that this would “iron out” a technical unfairness and will mean transactions including annexes will now be subject to the same rates of SDLT as a main residence. It is thought to have affected around 140,000 properties in the UK that have annexes.
However, the controversy didn’t end there and the debate has been reignited recently following comments from the Communities Secretary, Sajid Javid at the MIPIM UK trade show and conference. He hinted that a further SDLT U-turn could be on the cards as this year’s Autumn Statement will be Rt. Hon. Philip Hammond’s “first opportunity for reform” to that area of the market. Javid also told the property industry to “keep an eye out” for changes to real estate taxation in this year’s Autumn Statement.
At the time, Javid was quoted to say: “The Treasury is aware of the impact and is listening and looking at it. David Cameron’s Government is different to Theresa May’s and I don’t believe they wanted to slow buy to let down as much as we’re seeing now. The people that brought those taxes in aren’t there anymore.”
It will be interesting to see how Philip Hammond’s first Autumn Statement will encompass the changes of a new Government and a ‘new’ Britain as we head towards independence from Europe. At DMH Stallard, we will be keeping a close eye on proceedings from the day itself and we are here to help if any new laws relating to property and construction might affect you. You can find out more about our legal services in the real estate section, or get in touch for more information.