3% Additional Properties Stamp Duty Consultation --Multiple Merged Topics

[mattyboy1973]

So if you have a BTL house and you sell and move from your own residency you will be charged an extra 3% on your new home? So the only way around this will be to have one property in one name and your partner to have the other? This appears a crazy tax if its going to be applied like this, I would suspect this will end up applying to the buying and selling of property which isn't your primary residence.

Agreed it could get a bit messy, but the wording suggests that this is the case. They have outlined what would happen if e.g. you move without selling your previous place, and apparently - even though presumably the new place would become PPR - the 3% surcharge applies (and can be reclaimed upon sale of previous place within 18 months). So this does suggest to me that simply having your name on the land register will result in the surcharge when buying another property.

They also made it clear that married couples couldn't go the separate ownership route, but unmarried could - although that of course brings its own complications.

Edited November 27, 2015 by mattyboy1973

[Guest]

It had better be 'if you own any house already you pay the 3% whenever you buy a house'.

Everyone needs one house. No-one needs two.

MPs know all too well the loopholes that come along with designating one property or another the 'main residence'.

[interestrateripoff]

Will MP's be exempt or will this charge simply go on expenses?

[mrtickle]

So if you have a BTL house and you sell and move from your own residency you will be charged an extra 3% on your new home? So the only way around this will be to have one property in one name and your partner to have the other?

The intention of introducing it isn't for all the talk to be about "how to get around it".

This appears a crazy tax if its going to be applied like this, I would suspect this will end up applying to the buying and selling of property which isn't your primary residence.

I hope not. I hope it ends up as it seems now - EVERY transaction you make, if you already have a house, will have the 3% surcharge. You'll ALWAYS have to pay it, but you might get it refunded SOMETIMES.

[Simon Taylor]

I was thinking 1066.

That would be a good place to start; lots of the damage started when William doled out estates to his favoured generals. Amazingly, and almost uniquely in W Europe, a lot of these estates remain in the same families.

[dances with sheeple]

I have seen it written somewhere that you will have 18 months to sell the first one, after which you can claim back the extra 3%. You still need to stump it up, which will be off putting for many, imagine. I think quite a significant (unintended???) consequence of this will be people with one or two BTLs who move their primary residence. This will likely be much more expensive than their BTLs and could be a hefty surcharge.. almost enough to put you off owning a BTL

As an example - let's say you are living in the SE with a single BTL (somewhere cheap). Now if you want to move into a(nother) £1M home, the very act of owning your cheapo BTL will put you on the hook for an extra £30k in SDLT. It really might be worth getting shot of that BTL before committing to the move. I really hope it works in this way..

I`m guessing that someone who really needs to move, and thinks that their present house is worth about 600k (maybe with good reason as there have been sales in the street/area at that price, but the market now is sluggish) is going to go ahead with the move anyway, and stump up the 30k rather than go "right, lets start seriously cutting our asking price" (I`m assuming that just knocking 30k off isn`t going to shift it) Have I got that right, they are now classed as second home owners if they buy while still trying to sell, or is there a time limit where it doesn`t work like that?

The point is that even if you are close to broke you could raise 30k with credit cards, borrowing from mates/family, raiding all the penny jars, anything, because the move might be for a job you have to take or something? The point I`m trying to make is that people won`t necessarily change plans dramatically because of this, they will be pissed off but not saying "Lets hammer down the price". And as we know on here many 600k properties are probably only going to clear at maybe half that anyway, this change won`t make people face that reality, only real interest rate hikes or sustained unemployment could do that?

[Guest]

I know from personal experience that it's become normal for second-steppers not to sell when they move.

You rent out your starter flat instead (why not - your tenant pays your mortgage and gives you maybe a hundred or so to put towards your new mortgage) , and never mind the fact that had the people ahead of you in the queue done the same you'd still be renting.

I very much hope that this change will make becoming an 'accidental landlord' a considered and conscious decision, rather the obvious and default thing to do.

[Kiwi Toast]

So "the Wilsons" - totally unaffected by SDLT.

Apart from they will be absolutely destroyed when prices crash and rents fall too!

[rxe]

Any future crash will not be down to landlords, but down to changes in sentiment and the cost of finance for all purchasers.

Cost of finance is absolutely the most important aspect. As long as interest rates are absurdly low, borrowing to buy assets will continue because there is no downside (as long as you ignore what might happen in a few years).

[ccc]

The biggest change in my view - is the tapering down on mortgage tax relief from 100% to 0% over the next 4 years. This is going to have a massive impact on 'profitability' compared to the 3% change.

And as its being done over 4 years - George and his pals clearly want a nice orderly exit - rather than a 6 month 'stampede'.

The 3% is just the cherry on the top. The cake has already been baked - and is being delivered in slices over the next 4 years

[Bruce Banner]

Cost of finance is absolutely the most important aspect. As long as interest rates are absurdly low, borrowing to buy assets will continue because there is no downside (as long as you ignore what might happen in a few years).

Which anyone with even half a brain would not do.

[dances with sheeple]

Fwiw I think the govt whilst not wanting hpi don't want a nominal terms hpc either. Michael Green, in one of his rare apparently honest statements, said as much in 2010

No, not out there in the MSM with them getting the blame, but if it happens under cover of War on Terror/Europe/China Slowdown/Global Slowdown/US rate Decisions etc. etc. They (banks and government) will take it, run with it and profit from it. IMO. The turnover for bank loans and DIY shops alone must make them think about it?

[dances with sheeple]

Also if small scale landlords are going to reduce in numbers and the large scale ones are going to be encouraged, they will have far more power to increase rents, as choice for tenants will be reduced.

[/quot

There will be less tenants.

[billybong]

The other thing is if there's all the selling of individual owners' surplus property where will the money go.

Perhaps into more expensive main residences, into gold, into shares, into saving deposits, into pensions, into P2P, into overseas property, some into consumer stuff etc etc etc?? - or is it going maybe to be followed up with a bail in just as soon as the money goes into the banking system? Or will it have no net affect on other assets etc as the sellers money just goes back to where the buyers had it before buying? If it's purchases mainly through new loans then presumably it will boost GDP to help to make the UK statistically the wealthiest country in the world (refer Osborne pre-election promise) but in effect making no real difference to the people of the UK on average (except the bankers) except to make BTL type property and maybe some main residence property significantly cheaper for a while. Presumably any boost to the economy's statistics brings an interest rate rise a bit nearer (maybe not much nearer).

The extra tax could reduce the deficit until another hare brained scheme is suggested to help to squander it without any rebalancing of the economy.

Edited November 27, 2015 by billybong

[CunningPlan]

From a recent survey of myself, I see it this way.

My current rent is about 4% of the value of my home. I pay no insurance, repairs etc which probably account for about 1% of the home per annum if you calculated them correctly over the long term. Therefore it is costing me 3% to live here.

So currently, assuming I could get a mortgage at about 4%, I am saving money by renting.

What would the price need to be for me to buy - if I believed in HPI, I might but now. But I don't. There is either a drop or at the least a very long term stagnation ahead so no capital gain to offset my monthly loss.

I would also guess that over the next 25 years, interest rates would average about 6%. Therefore, with no HPI, the house would have to be half it's current price for it to make sense for me to buy.

Some would say that if I bought, at least I would be paying down the mortgage. But in fact, if I save the amount I would have had to pay on the repayment part of the loan, I will have a massive cash sum at the end of 25 years.

The old adage was that renting was dead money. When yields were 10% that was true. I think the break even is about 7%. When yields reach that level it makes sense to buy. Until then, I am happy to have my LL subsidise my lifestyle.

I think, when the MSM start reporting falling prices, many of the young who have become conditioned to renting will do the maths and think the same. But they will become very picky about who they rent from as they have a choice which currently doesn't exist. They will also have seen many older colleagues stung by BTL and will take a more analytical approach to the whole property owning issue.

[mattyboy1973]

The point is that even if you are close to broke you could raise 30k with credit cards, borrowing from mates/family, raiding all the penny jars, anything, because the move might be for a job you have to take or something? The point I`m trying to make is that people won`t necessarily change plans dramatically because of this, they will be pissed off but not saying "Lets hammer down the price". And as we know on here many 600k properties are probably only going to clear at maybe half that anyway, this change won`t make people face that reality, only real interest rate hikes or sustained unemployment could do that?

True, you could - and I am sure some people will. However I still think it is a pretty good disincentive - 30k is a lot of money, and it's real money as well - you can't just borrow it and add it to the mortgage any more (also, btw, coming on top of an existing $43k for this example £1M home).

I've also witnessed the "move and keep the old one" routine a lot round my way - it is almost becoming the norm. I think a large part of the thought process is that BTL is a "good investment" and pricey to get into (stamp duty, hassle etc), so it makes sense to keep a place if you already have it. This tax change will swing the balance away from that - especially if the extra SDLT payable is considerably more than would otherwise be spent when buying a BTL from scratch.

[Killer Bunny]

So if you have a BTL house and you sell and move from your own residency you will be charged an extra 3% on your new home? So the only way around this will be to have one property in one name and your partner to have the other? This appears a crazy tax if its going to be applied like this, I would suspect this will end up applying to the buying and selling of property which isn't your primary residence.

Paul Lewis has been tweeting that a married couple will be treated as one. So charge applies.

[winkie]

I was told I would be absolutely mad to sell a debt free home....rent it out, rent it out, borrow equity, re-mortgage, buy another on borrowed money, become a landlord, reap the rewards......so glad did not listen to the ponzi advise of those who think they know everything but in reality know nothing.

[Killer Bunny]

when was that?

[The Knimbies who say No]

Cost of finance is absolutely the most important aspect. As long as interest rates are absurdly low, borrowing to buy assets will continue because there is no downside (as long as you ignore what might happen in a few years).

There is plenty of downside with the removal of higher rate tax relief for mortgage interest, which increases finance costs even without rates changing.

There's also potential further downside when these changes are fully implemented as tax relief still exists at the basic rate- this can be removed altogether in time. Again, no change of rates required.

[billybong]

On whether Osborne wants a house price crash or not it's quite possible that he would like a crash as he has ambitions to be Prime Minister and although Cameron has said (you can believe everything he says) he doesn't want to be leader at the next general election but who knows but he might be asked to change his mind if everything goes swimmingly (unlikely but it's possible to make statistics say anything as particularly evidenced before the last general election) - it's well established that the welfare of the country and its people is matterless compared to the political ambitions of just one member of the LibLabCon.

So a house price crash might just be the encouragement needed for Cameron to actually leave (using the excuse he had said he would all along) and Osborne to then replace him without significant opposition (like Brown) just as the economy is on a manipulated statistical upswing again in the run up to the next general election.

Edited November 27, 2015 by billybong

[winkie]

when was that?

Time has little to do with it.......the time that does matter is the healthy, safe, secure, quality time left living, using the resources/ funds available split over ~time available.......the easier it comes the easier silly risks and stupid decisions are taken to lose the lot.....if not lost those behind will very easily lose what they are gifted and not earned faster than you can say Jack Robinson...we all hold the power to our our own destination.....there is no right or wrong answer, a right can quickly become wrong, the wrong becomes right.

Edited November 27, 2015 by winkie

[Si1]

Also if small scale landlords are going to reduce in numbers and the large scale ones are going to be encouraged, they will have far more power to increase rents, as choice for tenants will be reduced.

Evidence?

[Democorruptcy]

On whether Osborne wants a house price crash or not it's quite possible that he would like a crash as he has ambitions to be Prime Minister and although Cameron has said (you can rely on his word of course ) he doesn't want to be leader at the next general election but who knows but he might be asked to change his mind if everything goes swimmingly (unlikely but it's possible to make statistics say anything as particularly evidenced before the last general election) - it's well established that the welfare of the country and its people is matterless compared to the political ambitions of just one member of the LibLabCon.

So a house price crash might just be the encouragement needed for Cameron to actually leave (using the excuse he had said he would all along) and Osborne to then replace him without significant opposition (like Brown) just as the economy is on a manipulated statistical upswing again in the run up to the next general election.

How can a Chancellor possibly want a house price crash, when via the Treasury when he's going to own more property than anyone else in the country? He's just taken his share up to 40% of London Help to Buy Bail Banks purchases. Every day HTBB is running his portfolio is ticking up. His tax revenues would also plummet, partly because if houses cost less, people wouldn't need to work as many hours to buy one. He wants people to strive for life and making their largest living cost increase, helps to do it.

So any sign of price falls and it's more likely to be HTBB up to 40% everywhere, London up to 60%, HTBB2 on existing houses changed to the HTBB1 Equity Loan, etc.

The solvency of the governbankment and sterling is now tied to house prices. The value of the housing stock is several times GDP and each day HTBB is running, the governbankment's position is getting more precarious, as it takes a larger share of the housing stock, in relation to our wealth i.e. GDP. Osbanker has gone "All In"

[Venger]

You're reading way too much into HTB newbuild 40% London.

Smoke and mirrors.

You gonna buy at hyperinflated price via HTB extra debt?

Confusion. You can see the housing market invasion barges, for HPC, assembling and gathering with their other actions.

Edited November 27, 2015 by Venger