The introduction of the new stamp duty of 3% on second properties that will be introduced on 1st April 2016 has brought up a number of questions about how exactly the scheme will work and what situations would give rise to the payment of the additional stamp duty.
One of these questions is – will I pay the extra stamp duty if I already own a property abroad?
At the moment (January 2016) the consultation process for refining all the fine details is still in progress and so there is currently not a definitive answer to this. However, in the consultation document, the outcome that is pointed to, is the fact that there will be additional stamp duty payable if you buy a property when you already own a property abroad. This is what the document says:
However, property owned globally will be relevant in determining whether a property purchased in England, Wales or Northern Ireland is an additional property. This means that if someone is purchasing their first or only property in England, Wales or Northern Ireland, they may pay the higher rates if they own property outside these areas.
But, there is a specific question aimed at this situation which the government has asked for feedback on:
Question 10:
Do you agree with the government’s proposed approach to considering property owned anywhere in the world when determining whether the higher rates of SDLT will be due?
So there could be a change in the situation if enough people respond to the consultation document (by 1 February) and object to this situation.
Looking at the point of the legislation, the aim is to free up UK property for first time buyers rather from buy to let investors, so it may be considered that if the property being bought in the UK is a main residence then possibly there will be an exception in the legislation for this as the second property (abroad) would not be blocking any UK home owners from ownership of that property.
Results of the consultation will be released in mid March so there should be more clarification of this in due course.
I have a client that wishes to purchase a property through me as a local estate agent but he already owns a property in India.
Will he be liable for the additional stamp duty charge on his UK purchase?
Hi Tony, our understanding is that yes, he will be liable for the extra stamp duty unless a) he is already living in the UK and is just replacing his main residence or b) the property he owns in India is worth less than £40,000. There may be other circumstances that need to be taken into account so he should really seek clarification from his solicitor to confirm.