With the recent announcement of 3% increases to the stamp duty rates payable on new buy to let purchases and second properties, landlords are going to have to pay a higher amount on stamp duty from this April. For example the tax bill on a buy to let worth £250,000 is currently £2,500, but from April this increases to £10,000.
Value of second Current stamp Stamp duty from Increase in
property duty 1st April 2016 Tax
£150,000 £500 £5,000 +£4,500
£250,000 £2,500 £10,000 +£7,500
£350,000 £7,500 £18,000 +10,500
£450,000 £12,500 £26,000 +£13,500
Landlords looking at the long term will realise buy to let is still the way to go for a good investment. Rents are still strong with void periods rare and recently, properties in the Merton area have been increasing in price.
Ellisons sales records show in the last 5 years properties (property prices) have increased by an average of 40%.
With this trend most likely to continue, the sound investor will know, that although the initial outlay to purchase is higher, with anticipated capital growth taken into account, the extra stamp duty will definitely be worth while!
For further advice on buy to let contact our lettings department on 0208 944 8626.