SPENDING REVIEW 2015: The government is to introduce a 3% hike in stamp duty for second homes as part of a five-point plan to boost home ownership announced by the chancellor in today’s Spending Review.
The tax is designed to deter overseas and buy-to-let investors where their investment pushes up prices and makes home ownership unachievable for less well-off families, Osborne said.
He said the measure was expected to raise £1bn over the course of the next five-year parliament, with the cash principally redirected into areas most affected by second-home ownership, including London and Cornwall.
“People buying homes to let should not be squeezing out homes to buy,” he said.
The measure will be introduced by April next year and the government will consult on details so institutional investment in the build to rent sector is not affected, Osborne said.
Overall, Osborne said the government would double the housing budget to £2bn pa.
He confirmed plans to deliver 400,000 affordable homes in the next five years, of which around 200,000 will be discounted starter homes aimed at younger people.
He said 125,000 of the homes would be Help to Buy shared-ownership homes and that the government would review shared-ownership rules, removing restrictions on shared-ownership homes which limit who can buy, build and sell them.
Osborne’s five-point plan for housing:
- Extend Right to Buy to housing association homes, with tenants of the first five associations to sign up to the measure able to commence the process from tonight. The five associations are L&Q, Soverign, Riverside, Saffron Housing & Thames Valley.
- Planning reforms, including releasing land for 160,000 homes and designating commercial land for residential use.
- London Help to Buy – a new scheme offering Londoners with a 5% deposit interest-free loans equivalent to up to 40% of the value of the property
- Second-home stamp duty hike
- 400,000 new affordable homes
Phil Nicklin, real estate tax partner at Deloitte said: “The extra 3% stamp duty is a further blow for buy-to-let landlords, which comes hot on the heels of the interest restrictions for higher-rate taxpayers announced earlier this year, applying from 2017.
“These new measures will affect cash buyers as well and will affect the economics. For example, stamp duty on a property costing £250,000 is currently £2,500, but will more than quadruple to £10,000 after 1 April 2016.
“The additional 3% stamp duty charge will not apply to the replacement of a main residence or to corporates and funds making significant investments in residential property.”
jack.sidders@estatesgazette.com
| PROPERTY VALUE | PREVIOUS STAMP | PREVIOUS % | NEW STAMP | NEW % |
|---|---|---|---|---|
| £125,000 | £0 | 0.00 | £3,750 | 3.00 |
| £250,000 | £2,500 | 1.00 | £10,000 | 4.00 |
| £925,000 | £36,250 | 3.92 | £64,000 | 6.92 |
| £1,500,000 | £93,750 | 6.25 | £138,750 | 9.25 |
| Source: Deloitte |
