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

8th November 2016

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

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