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PROPERTY INVESTORS & THE STAMP DUTY HOLIDAY

Buy to let investors can benefit from the stamp duty holiday

Friday 7 August, 2020

As everyone is aware the stamp duty holiday was announced three weeks ago to try and stimulate the economy as we recover from the global pandemic. 

Thomas Oliver mortgage brokers receiving a high number of enquiries for mortgage advice

The introduction of the stamp duty holiday has increased the number of mortgage enquiries we are receiving in our mortgage department. The number of transactions and mortgages being obtained in the last fortnight has also increased. If you want to take advantage of the stamp duty holiday you will need to complete your house purchase before 31st March 2021. Call our expert mortgage brokers for mortgage advice on 01707 872000.

How to benefit from the stamp duty reduction if you purchase a property through a limited company

Vishal Gulrajani, Financial Planner and mortgage specialist in Cheshunt said: 

‘One question that we keep hearing from our investors, is can I benefit from the stamp duty holiday even if I purchase a property through a limited company? The answer to that question is yes. You still receive the same stamp duty incentives as if you were buying a property in your personal name. Please be aware that if you do a buy to let based mortgage purchase you don’t pay the normal stamp duty rate on the first £500,000 of your property purchase but if it is an additional property you will pay the additional property stamp duty charge of 3%. The same is true if you purchase a property through a limited company. 

Vishal Gulrajani, Financial Planner and mortgage specialist in Cheshunt continued: 

‘My recent article – Call our mortgage brokers today to save money on stamp duty goes through some examples of how much stamp duty you can save when buying a property. Below are the same examples amended to show how you are affected if these are additional buy to let properties or second homes you are purchasing. Remember, it is the same if you are buying through a limited company or in your personal name.  We are recommending that anyone who is looking for a residential or a commercial mortgage in the next few months contacts a Thomas Oliver mortgage broker before they start house hunting. Our mortgage advisers can review the mortgage market for you and check your income and expenditure so you know exactly how much deposit you require and how much mortgage you can borrow before you find your ideal home. This is helpful as it will save you time. Our mortgage advisors will also process your mortgage application with the mortgage lender and liaise with your solicitor on your behalf. Using a Thomas Oliver mortgage broker to process your mortgage can speed up your application which is important as many lenders are regularly changing or pulling products now because of the changing circumstances.’

Stamp Duty Costs for Buy to Let Investments or second homes – Case Study 1

If you were moving to a property worth £500,000: 

  • Before 8/7/20 you would have paid 3% on the portion of the property up to £125,000 (except where the total property price was £40,000 or less)
  • 5% stamp duty on the portion between £125,000 – £250,000 
  • 8% stamp duty on the portion between £250,000 – 925,000
  • The total cost you would have paid before 8/7/20 was £30,000

With the new rules you pay 3% stamp duty on any purchase up to £500,000, so the total cost of stamp duty is £15,000.

The reduction in the stamp duty up to £500,000 saves you £30,000 - £15,000 = £15,000.

Stamp Duty Costs for Buy to Let Investments or second homes – Case Study 2

If you were moving to a property worth £1,000,000:

  • Before 8/7/20 you would have paid 3% on the portion of the property up to £125,000 (except where the total property price was £40,000 or less)
  • 5% stamp duty on the portion between £125,000 – £250,000 
  • 8% stamp duty on the portion between £250,000 – 925,000
  • 13% stamp duty on the portion over £925,000
  • The total cost you would have paid before 8/7/20 was £73,750

With the new rules you pay 3% stamp duty on any purchase up to £500,000, and 8% on the amount up to £925,000 and 13% on anything above this amount, so the total cost of stamp duty is £58,750

The reduction in the stamp duty up to £1,000,000 saves you £73,750 - £58,750 = £15,000.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.

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