It’s now a matter of weeks until the new Stamp Duty rate hits purchases of second homes.
How is that affecting the coastal hotspots of Devon and Cornwall, asks Arabella Youens
Just a year or so after getting accustomed to the new configuration of Stamp Duty Land Tax (SDLT), which, according to the Treasury, reduced bills for 98% of buyers (at the same time, impacting those buying a house at £1.5 million and above harder), George Osborne announced another tweak to the system in December’s Autumn Statement. From April 1, buyers of second homes or buy-to-lets will have to find an extra 3% (on the whole purchase price) of cash to pay SDLT. Additionally, if you haven’t sold your previous home before you buy your next one, you’ll be liable for the extra duty—although any tax you pay will be refunded if you sell the former property within 18 months.
The Government is currently in consultation—until next Monday (February 1)—so we won’t know all the fine details until responses have been studied and the final details ironed out, but, for more about the nitty gritty of the changes as they stand today, see ‘Need to know’ (below).
In the brief passage of time since the announcement, the impact on the coastal market in Devon and Cornwall has been substantial. Jonathan Cunliffe, who runs the Savills Truro office, says he can’t remember a busier January (01872 243200). ‘We have a lot of people on our books trying to do something before March 31, which is the date by which all transactions need to have completed rather than simply exchanged. It seems that the new SDLT rates have really focused their minds.’
Along the coast in Devon, the offices of Marchand Petit, which operate within the popular South Hams area, are also reporting a strong start to 2016. ‘We generally find that second-home buyers reignite their search early in any new year, however, this year has been noticeably busier,’ explains Harriet Cundy from the Salcombe office (01548 844473).
The knock on of this interest has encouraged vendors in prime secondhome spots to accelerate their marketing plans. ‘Just as we have lots of buyers bringing forward their plans, we’ve had vendors who were thinking about selling in the next few years who have begun their marketing now,’ says Jonathan.
Indeed, Richard Speedy of Strutt & Parker’s waterside department (01392 215631) is advising vendors to take advantage of this ‘premature market’. He warns: ‘The future implications for any second-home tax are unknown, but it’s certainly going to slow sales of certain properties for a period of time.’
As a result, not only are stock levels unusually healthy for this time of year, but canny buyers can also
take advantage of some good-value properties—if they’re coming from a Londoner’s perspective. ‘Prices are very good, compared with those in the capital,’ says Jonathan. ‘Here in Cornwall, they’ve finally climbed back to where they were 10 years ago, whereas London prices have increased many times over, so we’re still a long way behind.’
Need to Know: Holiday home tax January 2016
** If you can complete your purchase on or before March 31, you will escape the higher SDLT rates
** You must pay the higher rates if you own two or more residential properties on the day of completion
** If you’re replacing your main residence, but haven’t sold your existing one yet, you may apply for a refund of the additional 3% SDLT, provided you sell it within 18 months of buying the new one
** Married couples and civil partners can only own one residential property between them before the higher rates apply on any additional property
** The position is different with unmarried couples where one party owns a property and the other party then purchases a property.
** The current information we have suggests that this additional purchase will not be subject to the higher rates
** The new regime is expected to apply even if the property you already own is outside the UK
Amanda O’Keefe, partner at Boodle Hatfield (020–7629 7411)