Carrfield Ltd are watching closely the proposals from George Osborne as outlined in the autumn statement 2015 to provide more housing. The key two strategies of particular interest are:

  1. Its commitment to extend Right to Buy to housing association tenants. This proposal was accepted by the Prime Minister and work is now underway to develop the detail of the process for Voluntary Right to Buy. There are five housing associations taking part in the Voluntary Right to Buy (VRTB) pilot and from members of the Sounding Board at the Federation’s National Conference on VRTB. Practical guidance on the implementation of the policy will be delivered with crucial updates on its key components.
  2. The proposals to increase rates on stamp duty for buy-to-let investors taking effect this April. The aim is to minimize the amount of foreign investors buying investment property in England. Also, to restrict the capacity of investment landlords to “buy up” homes that “ordinary” people could otherwise have purchased. The government are trying to figure out how to allow corporates and investors owning more than 15 residential properties to operate without being affected by the change in stamp duty. These owners may be corporates, funds or significant investors boosting the nation’s housing stock. The government is also seeking views on whether individuals making bulk purchases of 15 or more properties should be excluded from the extra charge. The Treasury implemented a consultation paper at the end of December 2015 that outlined the changes and the discussion process will finish on 1st February 2016. The policy will be outlined at the 2016 Budget on March 16.

Stamp duty rates

The proposed higher rates will be 3 percentage points above the current residential rates, including the 0 per cent band. They will be charged on the portion of the value of the property that falls into each band. The Treasury has tried to close any loopholes landlords could use to beat the stamp duty squeeze.


The extra 3% stamp duty on additional property purchase started on 1st April due to the latest budget report. 

•Chancellor backtracks on initial proposals to exempt ‘significant investors’ buying 15 or more properties

•Property investors are excluded from capital gains tax cut to 20%



Existing residential
SDLT rates

Proposed additional
rates for landlords

£0 – £125k



£125,001 – £250k



£250,001 – £925k



£925,001 – £1.5m



£1.5m +



Forming a company 

Many landlords are setting up limited companies to shield themselves from earlier announced buy-to-let changes that will see mortgage interest relief reduced to the basic rate of tax from April 2017. Companies can still get mortgage interest relief at their marginal rate, which may be higher than the basic rate of 20 per cent, but they won’t be able to escape the extra stamp duty charges. The Treasury is even proposing that the first purchase of a residential property for companies is subject to the higher stamp duty rate.

An example of how the new stamp duty calculations will apply to a buy to let/second home:

For example, anyone buying a £200,000 second home or buy to let before April pays stamp duty of £1,500

This is based on paying zero per cent on the first £125,000 of the property value and 2 per cent on the portion between £125,001 and £250,000.

But from April, landlords will have to pay 3 per cent for the first £125,000 and 5 per cent instead of 2 per cent on the amount between £125,001 and £250,000.

This gives them a total bill of £7,500.

So a landlord would end up paying five times more than a private purchaser in this example. It is not just landlords that will be hit but anyone owning a second home. This could be parents buying a property for their children or a couple purchasing a home together where one is already a homeowner.

Who will be affected?

Anyone owning a second property that isn’t their main residence and buying another, or replacing the one they don’t live in, is likely to get caught up in the change. This means if you already own a portfolio of buy-to-let properties, or have a second home, but plan to buy yourself a new home to live in and sell your old one then you will not have to pay the extra stamp duty.

The higher rates will only apply to additional properties purchased in England, Wales and Northern Ireland on or after April 1st 2016. 

Written by Alison Field MSc

Or for further information, refer to HMRC website, Housing Federation Association, Letting Update Journal and this is money website.