Stamp duty reforms are here to stay

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16 Mar 2016

Stamp Duty reforms are here to stay

Author: Michael Cook

During today’s 2016 Budget, Chancellor George Osborne confirmed that the Stamp Duty reforms will come into force next month.

From 1st April there will be a 3% surcharge on each stamp duty band where the property is being purchased as a buy-to-let investment or as a second home. That means that for properties worth between £125,000 and £250,000, where the stamp duty is 2%, buy-to-let landlords will pay 5%, and for properties worth more than £250,000 and up to £925,000, where the stamp duty is 5%, buy-to-let landlords will pay 8%.

Find out how much stamp duty you will have to pay if you complete a purchase on a second home or buy-to-let investment after 1st April 2016 with Romans' Stamp Duty Calculator.

Rental values increase

“We’ve seen a lot of evidence recently that the stamp duty reforms are not stopping investors from purchasing more properties” comments Michael Cook, Managing Director of Romans Lettings. “An example is Cornwall House, one of our new homes developments, in which the first three phases sold out extremely quickly with 74% of the apartments selling to investors, regardless of the fact that there is no guarantee the completion dates will be prior to the stamp duty reforms; demonstrating that investors are not deterred.”

“Furthermore, according to HomeLet’s latest Rental Index, average rental values in the south east have increased by 6.5%, when compared to the same period last year. And over the next 12 months we predict rental price increases of at least 5% and house price rises of 5-10% in this area, with house price rises of approximately 25% in the next five years, demonstrating a good regular return as well as long-term capital gain.

“With more and more tenants moving to the local area there is an on-going demand for rental properties and I cannot see this slowing down anytime soon.”

The Chancellor also announced during the Budget that anyone under 40 will be able to open a lifetime ISA. For every £4 you save, the government will give you £1 until you are 50, and the money can be used to save for a pension, or for a home. Plus, the second phase of Crossrail 2 has been approved which will run from North to South London and is due for completion in 2033.

If you would like more advice on buy-to-let investment please get in touch with Romans' Investment Portfolio team on 01344 985 699, or visit: romans.co.uk/investors.

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