There are more than 150,000 internet searches for a stamp duty calculator every month. Until the former Chancellor’s 2015 Autumn Statement, this was a phrase that received very few searches. George Osborne’s announcement regarding a 3% stamp duty hike for buy to let and additional properties had a massive impact.
According to the Office of National Statistics (ONS), buy to let mortgage completions saw a 181% increase from February to March. Investors raced to complete their purchase before the introduction of the 3% rise in stamp duty came into effect in April.
What effect did the 3% stamp duty change have?
Stamp duty changes caused an immediate slump in property purchases in April and May 2016. The ONS reports April 2016 property sales being 19.6% below the 5 year average for the month. Buy to let mortgages plummeted to make up just 8% of all mortgage completions in April (down from 30% the previous month).
Both the ONS and Rightmove have reported the beginning of a recovery in the buy to let sector, however this has at a significantly more subdued rate that other types of property purchases, signifying longer-term impact. Rightmove also pointed out that investors are keen to knock sellers down on their asking price in order to compensate for the additional cost of increased stamp duty.
Stamp duty calculator
The easiest way to work out how much stamp duty you’ll need to pay on a property purchase is to use a stamp duty calculator.
To give a real life example without the need for a stamp duty calculator:
- A buy to let landlord is buying a property for £250,000.
- The first £125,000 will be taxed at 3% (£125,000 x 3% = £3,750)
- The remaining £125,000 will be taxed at 5% (£125,000 x 5% = £6,250)
- Total stamp duty land tax payable = £10,000
That’s a huge £7,500 more than buy to let landlords were expected to pay pre-April 2016, so you can understand why the changes have had such an impact.
If you’ve been affected by the stamp duty changes and are considering selling off some of your less profitable properties, Quick Move Now could buy your property in as little as 7 days. Simply fill in the free, no-obligation estimate form below to find out how much we could pay for your property.