A FURTHER ATTACK ON PRIVATE LANDLORDS: The Chancellor’s Autumn Statement and Spending Review

On 25 November 2015 George Osborne gave his Autumn Statement and Spending Review. There was a particular focus on the government’s push for people to own their own homes which has resulted in a further attack on private landlords.  It was announced that there will be an increased SDLT rate for buy-to-let properties and second homes from April 2016 and a reduced CGT window for disposals of residential property from April 2017.

Capital Gains Tax

As things stand, gains arising from the disposal of residential property must be paid by the 31 January following the tax year of disposal. This is to be reduced to just 30 days from completion. This clearly benefits the treasury and will bring the payment date in line with that applying to non-UK residents who sell UK residential property.

Stamp Duty Land Tax

As indicated above, in a further attack on private landlords, the government are introducing higher rates of SDLT to apply to the purchase of additional residential properties for chargeable consideration exceeding £40,000. This will apply from 1 April 2016 and so landlords will want to think carefully about any purchase they want to make.

The higher rates will be 3% above the current SDLT rates for residential property. Therefore, on such property, the following rates will apply:

• £0 to £40,000  (first time buyers)     0%
• £0 to £40,000 (second home or investment) 3%
• £40,001 to £125,000           3%
• £125,001 to £250,000         5%
• £250,001 to £925,000         8%
• £925,001 to £1.5 million     13%
• Over £1.5 million               15%

If the property is not going to be your primary residence, these rates will apply.

It is important to note that these rates will not apply to corporate or fund purchasers that make significant investments in residential property.  The government are proposing to publish a consultation document on this policy ‘in due course’. That consultation will look at what a ‘significant investment’ would be for these purposes.

In view of the above, residential landlords and investors with more than one property will need to consider any plans that they may have to purchase further properties, or dispose of those that they already have, carefully. They will need to factor in the additional charges to purchase and the more onerous obligation to pay any CGT within 30 days of completion.