Property investors still have time to secure a new buy-to-let and beat the stamp duty rise, says a leading West Midlands residential property lawyer.
However Mitesh Lala, of Higgs & Sons, advises those looking to add to their property portfolio to act fast, as the new stamp duty rates come into force from April.
Announced by the Chancellor, George Osborne, in the November budget, the three per cent hike in the rates of stamp duty is expected to have a profound effect on landlords.
Mitesh said: “The changes are intended to reduce the number of buy-to-let properties which push up house prices beyond the reach of most first time buyers by increasing the duty payable by investors and landlords.
“For example, after 31st March that additional three per cent raises the duty on an investment property of £150,000 from £500 to £5,000 – that is ten times more tax.”
With the clock ticking until the deadline, investors must be aware that any delay in the completion of the purchase could result in them having to pay considerably more tax.
As landlords rush to complete buy-to-let and investment purchases, Mitesh has some timely advice for buyers and sellers to ensure they meet the deadline:
- Clear instructions should be passed to their solicitors as soon as a purchase offer has been accepted, so that deposit funds are provided and the necessary searches and enquiries are raised quickly
- Sellers run the risk of losing their buyers if there is a delay in preparing and supplying contract papers to their solicitors. If you are aware that your purchaser is buying for investment reasons, it is in your best interests to move fast
The changes would also have an impact on anyone buying a new residence before selling their existing home, for whatever reason. The new property would attract the higher rate as a ‘second home’, although the buyer would be entitled to reclaim the additional stamp duty tax if the sale takes place within 18 months of the second home purchase.
Moving forward, irrespective of the deadline, individual purchasers should remember that they will be responsible for providing correct information to their solicitors and conveyancers about their intentions, and should familiarise themselves with the new rules and take financial advice from their accountant.
Legal representatives will not be under a duty to determine when a buyer already owns a main residence, and providing clear and accurate instructions will ensure that the correct level of tax is paid.
Mitesh Lala specialises in advising Higgs & Sons clients on residential property matters, including sales and purchases, transfers of equity, remortgages, shared ownership leases and right to buy transactions.
Higgs & Sons is based in the heart of the Black Country at the Waterfront Business Park in Brierley Hill. The growing team now boasts 100 plus specialist lawyers available to support clients in a comprehensive range of business and private sectors.
For advice and guidance on buy-to-let investments, contact the Residential Property team on 0345 111 5050.