New Stamp Duty change is looming...

[LDN]

I'm, for one, going to get screwed by this... I'm looking for a new home with my partner and will not be selling my current home as I want to keep it / let it out - but researching I found the following; copied from an article:

For someone who wishes to move house but decides not to sell their existing property at the same time, the higher rate of SDLT will apply. This is because even though they are replacing their main residence with a new one, at the end of the process they will own 2 properties. If the previous property is then sold within 18 months a refund of the higher SDLT rate can be applied for.

If someone decides to buy a new home as a main residence, but wants to rent out their existing home instead of selling it, they will be liable for the higher SDLT rate. This is because they will own 2 properties at the end of the process.

... so, how to get around that one? I see the logic but it stings. I bought my current place a long time ago and will be moving residence. But I'll still have to pay the higher tax if I want to keep my current place.

What's odd is that - if you have a BTL portfolio - and are just moving residence (selling your main residence to buy another) then you will not have to pay the higher rate.

And so; this brings me to my idea. I will draw up a rental agreement right now and rent the apartment to a friend. It is then officially BTL and I can say it's a part of my BTL portfolio. Can it be that simple????

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But what I'm saying is... how many people over the last few years might have moved out of their main residence and decided to keep / let it out? How far back must the 'move' have happened for it to be considered, officially, as part of ones BTL portfolio? I am thinking of moving out next week and moving into my fiancés fathers house whilst we look for somewhere... so my official main residence will in fact; not be mine...

[LDN]

You have to have completed by the deadline.

Just for the record and the source of what I'm saying is this paragraph from the same article I also quoted above:

Similarly a property investor who already owns a buy to let portoflio should not be liable for the the higher rate of stamp duty if they decide to move. Again this is because the owner plans to replace their main residence and there is no retrospective tax to pay on their existing buy to let portfolio.

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Jobbo said:

You don't already own a buy to let portfolio though. That article is not the full picture but it's clear what is being referred to: if you own a house which you live in, and one or more BTLs, then you can sell your main house and buy another on the same date without paying the 3% loading. If you sell the previous main house later but within 18 months, you'll pay the 3% up front but can claim a refund on the later sale.

If you read through the consultation paper (which is the best we have for the moment) it will give you a better picture than an article: https://www.gov.uk/government/consultations/consul...

I do have a BTL portfolio... and so, moving out and into my father in laws property would mean that I'd add my current residence to my portfolio... I can't see why they'd not view my property as part of my portfolio if I have a rental agreement in place and I'm officially living in a home that is not my own whilst we hunt for our first home...

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Jobbo said:

I've posted a link to the best information available to us - I'm not about to argue with you. Read it, ignore it, take the advice given here (independently by both me and Eric) or don't. Your choice.

Not arguing at all; appreciate your posts. Reading through everything; I still can't see how what I propose as being 'wrong'... so I suppose I was looking for affirmation - I'll speak with my solicitor about it all - but at a glance, I'm not sure my plan is a bad one.

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Jobbo said:

I still think you're missing the point - the exemption from the 3% loading for selling and replacing a main residence can only apply if you sell it. If you just redesignate it part of your BTL portfolio, you don't satisfy one of the fundamental criteria.

Yes, I agree with this point but... what if I don't redesignate at the point of moving - but rather now. That's my point. How many people own property in a BTL portfolio that they have had as their home at one point? I hope you see what I mean but in any case will seek clarification.

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Jobbo said:

LDN said:

Yes, I agree with this point but... what if I don't redesignate at the point of moving - but rather now. That's my point. How many people own property in a BTL portfolio that they have had as their home at one point? I hope you see what I mean but in any case will seek clarification.

If you read through the consultation - it has examples and is in plain English, so it's worth doing - you'll see that designating a property as a BTL is simply not part of the way it works. Have a look at section 2.8; here's an extract:

"Most individuals only have one residence at any given time. Where an individual has more than one property, in most cases it will be clear which one is the main residence. For example where an individual owns two properties, one which they live in and one which they let out.

Individuals will not be able to elect which of their residences is their main residence and therefore the treatment of a main residence for the purposes of the higher rates of SDLT may differ from the treatment for capital gains tax."

Again, thanks - appreciate the posts. I've spoken with someone today who has - as a part of their BTL portfolio - two properties in which they've lived in as their main residence in the past. He's not worried at all as he says that they are indeed part of his BTL portfolio and he'll sell his main residence if he buys another... 'great' I said - I asked him 'what makes these properties that have been your main home but are now BTL - exempt from these changes (as apparently they are in as much as they'll only look at his main home being sold) - and my home that I can let out next week (and therefore becomes a BTL property to add to my others) still subject to these changes?? He didn't know and neither do I - he said that perhaps because I plan on letting it so close to the deadline; they'd have something to say - whereas if I'd done the same a year ago they wouldn't say anything; seems a pretty vague and foggy conclusion.

I agree that the general feel is that I'll be stung - but as I say; if I'd moved out my home a year ago and rented it out - that would make it a BTL property. They cannot stipulate that the only properties deemed BTL must have been bought with that intention from the very start... that seems unjust. And to clarify; it seems that you can have one hundred BTL properties - but as long as you sell your home within 18 months of buying another home; you will not get stung for the extra stamp duty (on that new home).

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Eric Mc said:

One property - no SDLT 3% surcharge

2nd or more - 3% surcharge.

Can't be any simpler than that.

But this isn't true - it's just been on TV also... if you have BTL properties but it's your home that you are selling / and buying another then you will not pay the 3% surcharge on that purchase. The surcharge is only applied if that person chooses to keep the property that they are leaving: whether they keep it as a second home OR turn it 'at that point' into a BTL. My question is / was - what about turning said property into a BTL before the point at which one wants to move. Apologies if I'm missing something here - but I feel there's more to all of this than meets the eye. An example; someone I know has a large portfolio of BTL's - a portfolio that includes two properties that he's lived in as his main home in years gone by. He has been told 'no worries'. It's his home that he will have to sell should he buy another home. They don't care that about his portfolio or that the portfolio includes ex - 'homes'. His portfolio will not affect his future purchase of any home; he will not have to pay the extra surcharge. Do you at least get my point that; they won't accept that a home is turned into a BTL at the time of a new purchase - they will want the extra 3% - that's clear... but how can they say anything if I live in a family members home whilst I look for a new home... and the home I'm leaving it rented out... at that point it becomes a BTL and just another part of my portfolio.

Another spin on this... the home I'm leaving - I want to keep it. I could purchase a cheap flat and move into that whilst renting my old home. I could then sell this new flat that I'd then be living in - when I find the place I really want. Some may say that that's a complicated way to do things - but if the home that I really want is going to cost a lot then the stamp duty may be eye watering. My original home that I do not want to sell would now a part of my BTL portfolio - and I sell the new cheap flat I bought to live in - when I find the place I really want...

Complicated yes - but that wouldn't put me off. I'm waiting to hear back from my solicitor on this. I suspect he wants to check all the angles himself before getting back to me. Either that, or he things I'm a raving loonie; which is entirely possible.

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CornishRob said:

Can someone clarify my situation if possible:

Own main house which I live in. Own with my partner.

Own 50% of another house which was left to me when my mother died. (Sister owns other 50% which we rent out)

If my partner and I sell our house we live in to move to another, will we have to pay the +3% SDLT because I own 50% of another house?

I don't believe so. You should be fine but don't quote me. Having BTL properties doesn't seem to affect the sale / purchase of a main residence - as long as you sell your current main residence within 18 months of buying your new home.

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Jobbo said:

Casa1862 said:

Flow chart in the gov document seems to recognise your main residence, if you replace it then no additional stamp duty payable.

I own one BLT and one main residence, if I sell my main residence and replace with new main residence then no extra stamp duty. Chart makes that clear, yes?

Only if you buy and sell on the same day. You pay the extra 3% if you keep hold of your old house, and get a refund if you sell it within 18 months.

The flow chart backs up my own thoughts that - when does ones main residence be deemed a BTL... i.e: if it's no longer my main residence - as in - I rent it out next week... it's then no longer my main residence; I'm letting it out. And I will stay with family until I find a home for myself. I feel like what I've been saying all along is true.

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Eric Mc said:

What has renting out a property got to do with any of this?

Whether the additional property is rented out or not is irrelevant. As long as the person owns more than one property AT THE SAME TIME, they will be liable to pay the extra SDLT.

Again, this is not true....... if you have a BTL portfolio but you sell your main residence whilst purchasing another main residence, you will not pay the extra stamp duty in that purchase. So that is why the status of a property (whether it's a main residence or a part of ones BTL portfolio) is important.

Not sure if I'm missing something or you are. Genuinely.

[LDN]

Beni997 said:

This is also causing a major issue for me. I own a house and so does my girlfriend. We live at my girlfriends and I have tenants in my house contracted to November this year.

We are looking at buying a new main home for us to live in (mortgage will be in my name only). Would I have to pay the increased stamp duty if we bought a new property as it would be our main residence as my current house I own has been rented out since November 2015??

It's simply not clear and your predicament is not too dissimilar to mine and many others... it's a joke that it's been left so vague so people know not what to do.

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Du1point8 said:

If I own a property outright and my OH is not on the deeds/mortgage/etc, what are the repercussions of the next one being in joint names or just solely her name?

Still get messed up by the increase in stamp duty?

If you plan on keeping your current place then yes you will be stung... if you sell up within 18 months of completion in your new place you will be refunded he additional stamp duty. If you want to keep your current place - maybe have your new home registered in only your OH name - and then have an agreement drawn up to protect yourself (depending on your trust levels!) - it's worth remembering that the value of the place will determine whether the hassle is worth trying to dodge the additional duty... the additional duty on a place around the 140,000 mark will be 4 grand - but on something over 300,000 / 400,000 then it goes into the tens of thousands.

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maxest said:

Beni997 said:

It's completely ridiculous why can't they just make it clear then everyone knows where they stand? It's stopping us buying a new house as if this wasn't hanging over our heads we would of purchased a new house last weekend. Surely this increased stamp duty system will just be passed onto the tenants with increased rental so the landlords cover any costs meaning people that are renting are hit the hardest??

Can you not complete by the 1st April? That's what I'm doing, had an offer accepted Tuesday

Completing by April 1st is a long shot now... if it's a cash purchase and there's no leasehold shenanigans involved, it may be doable but even then... you may scrape in but in a general sense; it's too late to buy now, and not be stung. I hope you make it before the midnight deadline! I'd be onto the solicitors five times a day to be sure.

[LDN]

maxest said:

LDN said:

Completing by April 1st is a long shot now... if it's a cash purchase and there's no leasehold shenanigans involved, it may be doable but even then... you may scrape in but in a general sense; it's too late to buy now, and not be stung. I hope you make it before the midnight deadline! I'd be onto the solicitors five times a day to be sure.

True I was advised there was no chance if a mortgage was involved, fortunately I can pay cash, and i'll mortgage in 6 months time. I've just sent the solicitors an email to see where we are upto lol

Yes, my last purchase was cash and I thought it'd be sewn up within four weeks... I needed a fast purchase (nothing to do with stamp duty) and was chasing it every day; it still took nine weeks! The property was a leasehold apartment so that was part of the hold up as you rely on everyone sending stuff in a timely fashion; never the case! With my purchase, I ended up calling both sides and getting the agent involved throughout to just chase and chase... my solicitor was held up on some points in the leasehold agreement and I ended up doing her job for her and clarifying the points; it would have taken weeks if I'd left it to her. Useless. When the solicitor bill came I actually said that I'd like a discount having done half her job for her.

If you don't chase and chase; these things can lag horribly. I have my fingers crossed for you!