25 March 2011 by Louise Dawson

A welcome surprise for residential property investors

In his budget on Wednesday, Chancellor George Osborne announced that the Government will change the stamp duty land tax (‘SDLT’) rules for bulk purchases of residential properties. This includes purchases of two or more properties in one transaction.

The rate of SDLT will be determined by the average value of the properties bought, rather than the current aggregate value.

In most cases, particularly where a large number of dwellings are acquired, this new relief will result in a significant SDLT saving. Under the existing rules the SDLT rate applied is based on the total consideration of all the dwellings purchased which has meant that SDLT usually falls within the 4% bracket (i.e. the rate for transactions over £500,000). The effect of the relief is that if the average price per property is £250,000 or less, SDLT will be charged at 1%.

In practice, this means that if 3 houses were purchased each at £250,000, SDLT would be payable on the total cost of £750,000 at 4%. This would mean an SDLT liability of £30,000.00. Under the new rules, the rate would be reduced to 1% which is the rate that would be payable if each house was purchased separately. This would reduce the purchaser’s SDLT liability to £7,500, a saving of £22,500.

As a new top rate of 5% for transactions over £1m is due to come into force from 6 April this year, the savings will be even more substantial.

A spokesman for residential landlord Grainger commented that:-

“By basing SDLT charges for residential bulk purchases on the mean value rather than aggregate, large scale investors will, for the first time, be on a more level playing field compared to individual investors.

This change will give an added boost to the private rented sector, which at the moment is the only growing part of the residential sector.”

The relief cannot be used to reduce the SDLT rate below 1% threshold. There is, however, no upper limit on the number of dwellings which may be included in a transaction. The relief will, therefore, override the existing rule that the acquisition of six or more dwellings is treated as a purchase of non-residential property.

These changes will be introduced in the Finance Bill 2011 and will have effect from the date of Royal Assent.

For advice on SDLT or buying and selling residential property, please contact Louise Dawson.

17 March 2011 by

Commercial Property on the increase

Finally some good news in commercial property, after a year spent raising capital, UK Real Investment Trusts are apparently now in the mood to spend.

24 March 2011 by Louise Dawson

Budget News, Anti-avoidance of Stamp Duty Land Tax

In yesterday’s budget, the government took steps to abolish the three main SDLT avoidance schemes. The first involves coupling a sub-sale with an alternative finance relief (commonly known as a Sharia sale and leaseback).

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