Which Stamp Duty for new residential property?

With regards buying a new residence after 1st April it appears you will be liable to the extra 3% SDLT based on the scenario you describe. See HMRC link:- https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties
With regards any existing properties whether any of them were your previous residence or not, there's no SDLT when you remortgage.
The same goes for when you let out your fiancees property; there's no SDLT as it is already owned. Beware however adding you to the Title Deeds as this may incur SDLT.

okay i think im getting the horrible picture now.
I have more questions so please bear with me!

1. would this scenario affect a joint home purchase in the future? I own a property which was my previous home; it is currently on a LTB mortgage and has been for 18 months. can i get a residential property on my own after April 2016 without incurring the additional SDLT?

2. Me and the wife want to buy a residential home together in 2 years, and let her property out at the same time under a LTB mortgage.
Would therefore we be liable for the additional SDLT in 2 years on our residential home together (im guessing yes if we keep her home and let it)?

3. currently the best way i can see this going forward is to let my wife's home out now, and buy a joint purchased residential home for us to live in before April to avoid this situation. we want to avoid being forced into this position as it will be very expensive and we will have to pay upwards of £5000 early repayment charges to exit her existing residential mortgage (unless they allow us to port it to the new property and we re mortgage the LTB with another lender?)

i really would appreciate any advice as i am currently gearing up to buy a further BTL in a company but cant do it all! i would rather retard my BTL empire by 5 years and get a home than risk having to pay an additional £20000 in tax for a residential home due to legislation. we plan to be there for 40 years but don't want to break ourselves to pieces to pay a vote tax.

The gov are making it extremely difficult to get ahead and create a modicum of future proofing my finances for retirement. i just don't understand why they want to punish us!

thank you for your help. its really appreciated.

I read the consultation paper from cover to cover and note that those who own a rental property, but not their main residence, will be liable for the extra tax. There is an exemption for existing buy-to-let owners who own a main residence and at present, this does not extend to landlords who do not own their main residence.

This puts myself and many of my peers at a disadvantage as I own a one bedroom flat which I rent out and I live with my parents. Should I wish to buy a property to live in as my main residence than I end up paying the higher stamp duty land tax charges. This is in stark contrast to somebody who currently has a rental property and a main residence, who then then buys an additional property to live in. In this instance, this party is exempt from the charges.

Have I understood this correctly ? has the Second Home SDLT charges adversely affected me ? Will this be rectified post consultation ?

Reply to the comment left by "English Desi" at "30/12/2015 - 22:06":

I read it the same way that you do. The only way around it for a first time own-home buyer who already has a buy-to-let that I can think of is to buy a property for less than £40K, do it up so that it is worth more than £40K and then live in it as your main residence before trading up. Renting or living with parents, mobile homes, houseboats and properties worth less than £40K at the point of sale are all nonexistent as far as the interpretation of these tax rules are concerned.

Reply to the comment left by "Adrian Bond" at "30/12/2015 - 20:35":

"1. would this scenario affect a joint home purchase in the future? I own a property which was my previous home; it is currently on a LTB mortgage and has been for 18 months. can i get a residential property on my own after April 2016 without incurring the additional SDLT?"

Excellent question. If you look at the graphic (https://whitehall-admin.publishing.service.gov.uk/government/uploads/system/uploads/image_data/file/47781/SDLT-diagram.jpg) I would say 'no' to you having to pay the SDLT surcharge in this scenario. My caveat though is that I am not a tax adviser so I recommend that you get this confirmed by a property tax expert.

"2. Me and the wife want to buy a residential home together in 2 years, and let her property out at the same time under a LTB mortgage.
Would therefore we be liable for the additional SDLT in 2 years on our residential home together (im guessing yes if we keep her home and let it)?"

I refer to the graphic above which will clarify this for you

"3. currently the best way i can see this going forward is to let my wife’s home out now, and buy a joint purchased residential home for us to live in before April to avoid this situation. we want to avoid being forced into this position as it will be very expensive and we will have to pay upwards of £5000 early repayment charges to exit her existing residential mortgage (unless they allow us to port it to the new property and we re mortgage the LTB with another lender?)"

Possibly. As you rightly say, there are all manner of other costs and charges to factor in too, so a thorough conversation with a professional mortgage adviser is also recommended. See my profile for contact details and we'd be happy to help.

.
Howard Reuben recently posted...Contact HD Consultants - Mortgage & Protection | Buy To Let | Colchester

Reply to the comment left by "Adrian Bond" at "30/12/2015 - 20:35":

1) The graphic indicates to me you would pay extra SDLT
2) The same applies here in my view
3) If you complete before 1st April on your new purchase you're home & dry with regards no extra SDLT on the purchase (if you can find/exchange/complete in such a short space of time & the vendor wants to also sell fast). With regards the early redemption penalty on your current main residence, you can get round this by either porting the mortgage subject to the lenders criteria, or it may prove best to ask your current lender for a Consent to Let which may incur a fee and/or interest rate levy. Once you know the facts, if allowed both options you can then make a decision of whether to port & simultaneously get a LTB on your current residence (which I suggest you do use a broker for) or get a C2L and get a new residential mortgage on your new purchase. Call your lender and ask and about porting & C2L & if they say they would give a C2L, besides asking them on what terms they'd grant this & any costs involved, also ask what their criteria is for supporting the amount owed & what documentation they need.

Hi,
I own two properties (one is my main residence) and am looking to buy a property jointly with my girlfriend who is a first time buyer. My current property will be switched to let to buy to enable me to do this.
Will we attract the SDLT on the new purchase? It just doesn't seem fair that she would be subject to this as a first time buyer just because she is buying a property with me? I'm really beginning to hate this government!!!!
Thanks in advance.

I had hoped to do a let to buy to a new main residence but will now have to speed things up, if that is possible. We haven’t found anywhere yet.

If we can’t meet the April deadline, I had thought of switching the one BTL my wife owns with me into my name, put the current residence (joint mortgage) into a BTL in my own name, then buy the new main residence in both our names. This would mean my wife would only own one property – the new main residence.

The new main residence would have to be in joint names in order to qualify for sufficient mortgage.

Would this get round the new legislation?

Reply to the comment left by "Dwayne " at "02/01/2016 - 10:14":

Under current proposals it looks like you will pay the extra stamp duty. The government have recognised however that in the case of joint purchases where only one buyer already owns a property it may seem to be unfair that the first time buyer will be affected by the extra stamp duty. To this end they are inviting people to write in as part of the consultation process with suggestions as to how things can be adapted to make this fairer. I would suggest you visit the hmrc consultation page to find the address and write in with your thoughts. I too am a co-owner and have written in with my concerns. One potential work around I can see would be for you to rent out your current property and for you to move into rental property for a period. When you then come to buy, because your main residence is now a rental property you should not be affected by the new sdt as the proposals allow for buy to let investors to move from rented accommodation to residential. I will be considering this as an option.

Reply to the comment left by "Kevin Thomson" at "02/01/2016 - 10:25":

Where would live whilst you do this? I don't believe you will be able to convert a residential into a btl whilst you are still living in it and claim it's not your main residence? If you moved into residential property I would imagine there would be some kind of qualifying period. Not sure anyone yet knows exactly if that is allowable and how long a qualifying period would be required.