£9m Paid in Stamp Duty by Rutland Residents

Apart from some minor exemptions, ‘stamp duty’ is paid by anyone buying a property over £125,000 in the UK.  It presently raises £10.68bn a year for the HM Treasury…interesting when compared with £27.6bn in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco duty.

In the latest set of data from HMRC, in the Rutland constituency, property buyers paid £9m stamp duty in one year alone.  Although not as much as the eye-watering £324m in income tax that Rutland residents paid last year.

As you may know, George Osborne introduced an additional tax for landlords and from 1^st April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy-to-let property.  There were tales of woe and Armageddon following a report by Deutsche Bank suggesting the new surcharge could see house prices fall by as much as 20%.

In data released by HMRC for Quarter 2 (Q2), those fears seemed to be backed up, as they published some worrying figures; only 1 in 7 properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).

In previous articles, I spoke about the slump of property transactions after the 1^st of April (as landlords rushed through their property purchases in March to beat the April deadline).  In Q2 of 2016, £1.976bn was raised in stamp duty from residential property.  Of that £1.976bn, £652m was paid by buy-to-let landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge).

However, looking at Q3, the numbers have improved significantly.  Of the 235,000 property sales, nearly 1 in 4 of them (56,100 to be precise) were bought by buy-to-let landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty by BTL landlords and an impressive £442m paid by those same landlords in the additional stamp duty surcharge.

The statistics suggest buy-to-let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year.  The figures also show that 65.4% of buy-to-let purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy-to-let properties bought cost over £500k – interestingly nearly 1 in 4 (22.2%) of £500k properties purchased in Q3 were buy-to-let properties.

It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31^st March, making figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy-to-let properties purchased increased by 85%.

If you are considering purchasing an investment property, or would like to discuss one you already own, please get in touch with me.

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