April 1st – Are You Ready

Landlords need to be ready as 1st April sees the imposition of Stamp Duty Land Tax. This means that landlords buying further buy to let properties will be in the same position as those buying a second home, where they will be paying a minimum of 3% extra stamp duty. In order to escape this, sales must be completed by 31st March, exchange of contracts is not enough. In a more relaxed financial climate, such changes would be considered inoperative if the sale had commenced, not completed but alas, those times are gone. 


Julia Casimo of John Kerr Chartered Accountants, has warned that an additional 3% stamp duty would be paid on properties worth up to £125,000 and an additional 5% tax to be paid on properties valued between £125,001 and £250,000, with higher levels for properties that exceed £250,000 in price. The only properties exempt from increased stamp duty are those priced at below £40,000. This is hardly generous – there are few areas in Britain that have such low-priced properties. Where there are, prospective buyers would need to be aware that to put them into lettable order, a considerable outlay of money will be required.

It is worth urging caution when buying. Don’t panic and be rushed into purchases and completion; continue to get full surveys completed; be sure of how this property fits into your business plan. Are you sure you have the finances in place to do what is necessary to the property? Does this property fit in with the general look of your portfolio? If not, it may be a rash buy, prompted by the understandable desire to increase portfolio without attracting the extra tax.

Of course, of over 2 million landlords, only 4% have more than one property and could perhaps be best described as active landlords, and therefore the ones most likely to be affected by the changes, as perhaps more likely to be looking at increasing their portfolios. There may be some good news, in that this could affect property prices at the margins of the tax band. Expect to see prices reducing to under £125,000 and under £250,000 as caution from prospective purchasers may mean sellers feel forced to lower prices below the threshold.

The advice from Ms Casimo, seems a little late, coming only shortly before the new duty charges are introduced. Although conveyancing can now be a great deal quicker with the advent of computerised systems, there seems little that a prospective owner can do to speed completion.

Landlords are advised to take it on the chin, to make no rash decisions and to follow their usual modus operandi. Nobody wants to spend thousands more than they need to, but patience and waiting for the owner to lower the price may be more profitable than trying to accelerate procedures without the usual checks and find yourself with a property which doesn’t meet your property profile and worse, could cause problems in the long-term. Far better to be cautious and ensure that any investment is the right one for you.

Fail to prepare, prepare to fail – Don’t be an April Fool