The Chancellor announced in the Autumn Statement that new rates of SDLT on purchases of additional residential properties would apply from 1 April 2016. The new rates will be 3% above the normal rate of SDLT.

The higher rates will potentially apply if, at the end of the day of the purchase transaction, the individual owns two or more residential properties. The announcement will be of concern to those looking to invest in the buy-to–let market or those looking to purchase a second home.

The additional rate will not apply where a person sells and buys their own main residence at the same time. The sale and purchase would have to take place on the same day and consideration would have to be given as to what constitutes a main residence. The legislation is complicated anda potential minefield.

After some consultation the Government announced:

  • Purchasers will have 36 months to claim a refund of the higher rates if they buy a new main residence before disposing of their previous main residence
  • Purchasers will also have 36 months between selling a main residence and replacing it with another main residence without having to pay the higher rates
  • A small share in a property which has been inherited within the 36 months prior to a transaction will not be considered as an additional property when applying the higher rates
  • There will be no exemption from the higher rates for significant investors.

The main target of the higher rates is purchases of buy-to-let properties or second homes. However, there will be some purchasers who will have to pay the additional charge even though the property purchased will not into fall into those categories.

Care will be needed if an individual already owns, or partly owns, a property in the UK or overseas, and transacts to purchase another property without having disposed of the first.


The main points to note are:

  • The new SDLT rates are effective from 17 March 2016
  • They apply to commercial and mixed use property
  • The payment calculation for sales and lease premiums is changed from a slab basis to a “fairer” slice basis (in line with previous changes to residential property)
  • A new 2% rate has now been introduced for rent payment on the grant of a lease
  • Transactions over £1.05 million will be subject to more SDLT under the new system

For more information on Residential Property please contact Tina Crow and Commercial Property Tim Read.

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