This is a further additional tax on those who wish to invest in property as an alternative vehicle for saving, given the historically low levels of interest rates available on keeping wealth as cash.
The announcement of this change in the Autumn 2015 spending review comes hot on the back of the announcement on the restrictions on claiming tax relief for mortgage interest announced in the July Budget.
Chancellor George Osborne said: “More and more homes are being bought as buy-to-lets or second homes. Many of them are cash purchases that aren’t affected by the restrictions I introduced in the Budget on mortgage interest relief; and many of them are bought by those who aren’t resident in this country.”
For purchases on or after April 1, 2016 higher rates of SDLT will be charged on purchases of residential property which will be used as buy-to-lets or second homes. Based on a premium of 3% above existing SDLT rates, the starting rate will be 5% and seems set for a lower starting point of £40,000.