A number of property investors, including buy-to-let landlords and property developers, are still unaware that they are liable to pay the stamp duty land tax surcharge (SDLT) introduced in April when it comes to buying additional homes in England, Wales or Northern Ireland, according to a Liverpool-based law firm.
Jasper Dawson from North West law firm Kirwans is seeing an increasing number of cases whereby purchasers are discovering at the last minute that their returns could be far less than expected, due to the additional stamp duty land tax surcharge.
Those particularly affected are investors buying properties with a view to changing their use from residential to commercial, buy-to-let landlords, and small-scale property developers whose already modest returns are hugely affected by the 3% tax.
Since 1 April, anyone buying an additional property in England, Wales or Northern Ireland has paid an extra 3% stamp duty surcharge - in many instances trebling the tax bill property investors’ face.
Buy-to-let landlords have been really hard hit by the stamp duty surcharge. They are set to pay the Treasury an extra £3.1bn in tax following this year’s controversial stamp duty reforms.
But surprisingly, according to Jasper, many property investors are not aware that they are subject to the additional cost, until the point at which they are about to exchange contracts, and are forced to seek urgent legal advice to find out if there is a way that they can legally avoid paying the tax.
Jasper said: “Since the 3% stamp duty was introduced in April, we have dealt with a number of clients who have discovered that the residential property they were planning to buy, perhaps to turn into offices or to regenerate and re-sell, is subject to this tax.
“Often, these purchasers have been unaware right up until the last minute that this tax affects them, as many assume it only affects those buying second homes for personal use. The range of properties that this charge covers is vast; even off-plan purchases can fall into this bracket.”