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Posted on November 1st 2016 by admin-movingin

Stamp Duty surcharge on purchase of extra homes nets Treasury £670m in six months

Original Author: Marc Shoffman

The 3% Stamp Duty surcharge on the purchase of buy-to-let properties, holiday homes and other additional properties has boosted Treasury coffers by nearly £700m in the first six months.

After a slump in the second quarter, the number of additional properties that incurred the surcharge in the third quarter was 56,100. Altogether, 235,000 property purchases incurred Stamp Duty, meaning that one in four properties was bought as an additional home.

Since April 1, when the surcharge was implemented, there have altogether been 86,400 purchases of additional properties, accounting for £1.28bn in Stamp Duty receipts, of which £670m is from the surcharge. In the third quarter, the Treasury’s take from the surcharge was £440m.

Most liable purchases for additional Stamp Duty (36,700) fell into the under £250,000 bracket, while 13,300 were for additional properties in the £250,000 to £500,000 price range and 6,100 for values over £500,000.

The surcharge was announced in the 2015 Autumn Statement by George Osborne, and was seen as an overt attack on landlords and an attempt to sideline them from competition with first-time buyers.

It undoubtedly caused distortion in the market.

In an attempt to beat the April 1 deadline, a large number of property purchases were pushed through the month before – resulting in an extraordinary increase of 71% in the number of residential property sales between February and March.

The total number of property sales in April then collapsed – and were 19.6% below the five-year average for the month.

However, purchases of additional homes doubled in the third quarter compared with the second quarter.

The HMRC figures are likely to be reduced: people buying a second home before they have been able to sell their first will be able to obtain a refund of the 3% surcharge if they can put in a claim within three years.

Critics of the 3% surcharge say that it is the tenant paying the price rather than landlords, while the levy also affects parents helping their children on to the housing ladder.

ARLA managing director David Cox said: “While landlords are the ones paying the tax, it is in fact tenants that are footing the bill in higher rents.

“If the Government’s aim is to provide a home for all, taking [almost] £700m from hard-working tenants is a self-defeating move.”

However, Betsy Dillner, of Generation Rent, said: “The Government’s landlord surcharge has clearly had a successful first six months.

“It has been too easy for speculators to ride the property market, shutting out would-be first-time buyers in the process, so it is only right that the Government uses the tax system to deter or mitigate this.

“The Chancellor now needs to use those proceeds to help people who remain a long way from home ownership by investing in new rented homes for low income households.”