Will the proposed changes to Stamp Duty tempt more property investors into the market?

At the present time, if you were to purchase a number of properties from the same Seller, whether at the same time or at different times, then these purchases, for Stamp Duty Land Tax (SDLT) purposes, would be considered “linked” transactions.  This means that the total value of the properties purchased would be added together and SDLT would be paid upon the aggregate value – total purchase price.

The Government announced in the recent budget that it planned to change the way SDLT was charged on such transactions by taking the mean value of the properties – their individual value. The proposed changes are due to take effect with the introduction of the Finance Act 2011 in mid July 2011.

Here is an example to explain the sistuation more clearly:

Current SDLT on Bulk purchases (Apr 2011)

Purchased 5 X £140,000 appartments from same developer in the same block. Total = £700,000   STAMP DUTY PAYABLE @ 3% = £21,000

From Mid July 2011 onwards

Purchased 5 X £140,000 appartments from same developer in the same block . Mean value = £140,000   STAMP DUTY PAYABLE @ 1% per property X 5 = £7000

This is welcome news for investors and a much more rational approach to Stamp Duty taxation on bulk purchases.

Another change is  proposed in the way these investments can be held. At present only commercial property can be held within a pension fund.  If the proposed changes are made, this could enable residential property  to be held within a Real Estate Investment Trust (REIT).

If you are thinking of investing in buy to let property, even bulk buying, buying at auction or purchasing commercial property, contact Angie at Newnham & Jordan Solicitors in Wimborne, for an informal chat to see how we can help you through the legal process?

Click here for for detailed information concerning Stamp Duty Land Tax on UK Property 2011-2012

This article is intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

Article by Angie Newnham

Having worked for various law firms in the Bournemouth and Poole area Angie Newnham decided to set up her own business in 2010. Angie’s experience covers a range of legal disciplines including Property Law and Conveyancing, which includes both residential, commercial and agricultural work, Social Housing, Landlord & Tenant issues, Wills, Lasting Power of Attorney and a niche interest in equine law and equestrian agreements.