Landlords count the cost of new three per cent stamp duty levy

8th November 2016 | News

Almost half of all stamp duty land tax (SDLT) received in Q3 2016 came from property transactions by landlords and buyers of second homes who paid the 3% surcharge.

The number of buy-to-let properties sold grew by 25,800 in the last quarter and since the inclusion of the new 3% stamp duty levy on 1 April 2016, buy-to-let and second property transactions generated £670m through the higher rate of SDLT.

The total estimated receipts for Q3 2016 was £2.2bn from residential transactions; an increase of 12% on the previous quarter, which reflects the higher rate surcharge. Non-residential transactions were down year-on-year by 23% at £708m.

Total SDLT receipts for Q3 2016 are at the highest levels they’ve been for a single quarter since the statistics began back in 2008.

Nimesh Shah, partner at Blick Rothenburg, believes the introduction of the 3% surcharge is viewed as a ‘back door’ route to increasing SDLT rates.

“We are probably looking at the highest number of SDLT receipts ever for one quarter,” said Shah.

“But the fact that nearly 40% comes from property transactions which were subject to the 3% surcharge confirms our suspicions that the introduction of this measure was effectively an increase in SDLT rates ‘by the back door’.

“The introduction of the 3% surcharge from 1 April 2016 re-balances that lost tax revenue from the earlier change and the latest figures would confirm that it worked.”

The new 3% rate is charged on additional residential properties such as buy-to-let property and second homes valued greater than £40,000.

Paul Haywood-Shiefer, assistant manager, Blick Rothenburg, said: “This is almost a 100% increase on the position on Q2 of 2016, where the sales of second or additional properties only amounted 21% of the total SDLT receipts.

“The likelihood is though that many of the sales of second or additional properties had been rushed through in March to beat the 3% rise.

“While Q4 2015 and Q1 2016 saw 112,560 more residential sales than Q2 and Q3 of 2016 (689,720 to 577,160), the tax receipts collected were £477m less (£3.707m to £4.184m).

“It is clear that the additional 3% is making a difference.”

Image: tom_bream07