Thinking of buying a second home? A guide to stamp duty changes

Ten key points to consider when buying a second home for your own use or as a buy-to-let investment

To buy-to-let or not to buy-to-let, that is a difficult question! It can be quite a conundrum for people with capital to invest who are dithering between the stock market or bricks and mortar.

Since April 1 – as many homeowners will be aware – a stamp duty surcharge of three per cent has been levied on second homes with obvious implications for the buy-to-let sector. If you are contemplating a second home, whether for your own use or as a buy-to-let investment, here are the 10 key points to bear in mind.

1. Stamp duty – or to give it the full title, stamp duty land tax (SDLT) – is a tax paid by homebuyers when they purchase property or land. The tax is banded so that no tax is levied on properties worth less than £125,000, but £7,500 on a property worth £350,000 and £43,750 on a property worth £1million, and so on.

2. Since April 1 second homes have been subject to a three per cent stamp duty surcharge. Under the banding system, second homes worth less than £125,000 now attract three per cent tax instead of zero. Those worth between £125,000 and £250,000 now have a five per cent rate rather than two per cent, and so on. At the top end of the scale, second homes worth in excess of £1.5million attract 15 per cent stamp duty rather than 12 per cent.

3. Visit the government’s stamp duty calculator to work out tax liabilities.

4. Second homes – for the purposes of the stamp duty surcharge – are homes other than a main residence whether they are let or not. It does not matter if a main residence is overseas because a second home in the UK will still be subject to the stamp duty surcharge. However, a buy-to-let property will not attract the higher rate if the main residence is rented, not owned.

5. Homebuyers helping a family member buy a property will still be treated as second home owners and the relatives will be liable for the surcharge.

6. Anyone owning two homes because they have bought a new one, but not yet sold the old home, will have to pay the three per cent surcharge. But if the old home is sold within three years, the three per cent will be refunded.

7. No one will be able to escape the higher rates of stamp duty by ‘flipping’ properties which is defined as moving into a new home, designating it a main residence, then letting out the old home.

8. Couples who have separated, but not yet divorced, and own two properties between them, will not be treated as second homeowners. But couples living together, whether married or not, will be treated as one unit. They will not be able to buy a second home and escape the surcharge by putting one property in one partner’s name and one in the other’s.

9. Stamp duty is not payable on caravans, mobile homes or houseboats.

10. It is sometimes possible to reduce stamp duty liabilities by designating a property, whether the main home or a second home, ‘mixed-use’: i.e. used for both residential and commercial purposes, such as running a small business. But this can also expose the homeowner to higher business rates and higher rates of capital gains tax. If in doubt, talk to an accountant or mortgage provider about tax liabilities.

Please contact us on 020 8643 7777 or email at info@christiesworld.com

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A guide to getting your home ready for viewings

A picture speaks a thousand words
The first thing that potential buyers see when they enquire about a particular property is the ‘property details’. This is a bespoke document, produced by us. It isn’t just a mundane list of power points, number of radiators and confirmation that you have dado rails; it’s a high-spec brochure designed to really sell your house. We take professional quality photographs, we’re honest and we’ll shout loudly about your home’s best bits.

First impressions really do count

Stand outside your property and try to look at it with a fresh pair of eyes. Does it have ‘kerbside appeal’? Is the lawn mown? Are the flower beds neat? Is the front door grubby? Do the bins need emptying? If you have a communal entrance hall, does the carpet need a hoover? Are there piles of mail making the place look untidy? In the winter, make sure any paths or steps are clear of snow and ice. If you have a doorbell, make sure it works.

Let them see the light

If your viewing’s after dark, think about the lighting so your home looks warm and inviting. Make sure house numbers and names can be seen clearly so your potential buyer can find you. Keep the porch or hall light on. During day time, make sure curtains and blinds are left open to maximise natural light into your home.

Fatal distraction

Your cat or dog might be your best friend and your kids are your pride and joy, but do keep any pets or children quiet or out of the house when you have viewings if you can. Let your potential buyers see your property without any distractions. Turn your music off too.

Spit spot!

Full redecoration is unnecessary, but do give your home the once-over and do any little jobs that might be making the place look more shabby than shabby-chic! Repair any peeling wallpaper, touch up chipped or marked paintwork, dust the skirting boards, clean the kitchen cupboards, wash the floors, replace any light bulbs, thoroughly clean and tidy every room. And please, please, please… clean the windows!

Get a handy person in

If there are other things that are letting your property down (broken sash cords, missing doorknobs, broken tiles, dripping taps, cracked/ missing sockets), then get them sorted. It will be money very well spent.

Kitchens and bathrooms sell homes

This really is true so pay particular attention to these rooms. Put away as many of your items as possible so your potential buyers see clutter-free surfaces. Taps covered in limescale, a stained bath and grubby, cluttered worktops will not create a very good impression, so get your Marigolds on and clean, scrub and polish until these rooms look shiny and inviting!

De-clutter and recycle

Lots of storage space is always popular so do everything you can to maximise what you have. Sort out your attics and basements, make sure any cupboards are tidy and organised, recycle anything you no longer need or want (be honest) and generally have a good clear-out. It’ll be one less thing to do when you do move out.

Crowded house

Potential buyers always feel a bit like they’re intruding so minimise the amount of people in the house when you have viewings. If you are showing a potential buyer your home let them look around at their own pace and give them the option to explore on their own. They will have a great deal to think about and discuss and sometimes that’s easier if you’re not following them from room to room! Suggest that you leave them to it and offer to answer their questions once they’ve had a good look round.

Please contact us on 020 8643 7777 or email at info@christiesworld.com

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Need to sell fast? Hurry, hurry, hurry - last chance to get your property in our next Auction.

Still time to enter lots in Christies Network Auctions’ July Auction

NAVA auction house of the year, Christies Network Auctions are still accepting lots for entry in their July auction at the Grosvenor House hotel in London on July 7th.

Sellers will need to move quickly though as the catalogue will close to new entries on June 14. A wide variety of lots have already been listed and will go under auctioneer Guy Charrison’s hammer on the day.

Auctions provide a fabulous opportunity for sellers to dispose of property in a fast, transparent and certain way with Christies Network Auctions regularly selling more than 80% of the lots offered at their auctions.

Christies Network Auctions hold eleven auctions every year with six in London and five in Birmingham.

Jeremy Richardson said: “Despite current uncertainty caused by the Euro referendum at the end of June, we anticipate a positive auction in July as buyers will have an opportunity to take decisions already knowing the outcome.

Auctions are a transparent, fast and secure method of sale and we look forward to announcing the result of another successful sale on July 7th.”

To discuss selling or buying by auction, Christies Network Auctions can be contacted on 020 8643 7777 or email at info@christiesworld.com

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This Blessed Plot

Nick Churton of our London Mayfair Global Network finds evidence that not a great deal has changed in four hundred years when it comes to property investment.

William Shakespeare, who died 400 years ago last month, knew a thing or two about plots. And not just plots for his plays; he also developed an eye for plots of land and the buildings on them.

Part of Shakespeare’s genius was powerfully and colourfully exploring human nature in all its brutal, funny, frail, tragic and complicated guises. Over the centuries human nature hasn’t changed much so it is easy to imagine that the bard would have handled his property affairs today as he did four centuries ago. Shakespeare, it seems, not only had a way with words but a talent for investing in bricks and mortar.

In this he demonstrated a true understanding of the art of property. For instance he understood about investing in areas he knew well: his birthplace, Stratford upon Avon, and his workplace, London, where he invested in up-and-coming areas such as Bishopsgate, Blackfriars, Southwark, and what we know now as the Barbican.

Shakespeare really appreciated location. Although he did not coin the phrase, location, location, location, he certainly could have done, such was his appreciation for finding the ideal position for a home or a theatre. Shakespeare clearly understood that knowing one's market is key to successful investment in property.

With his outstanding knowledge of human nature Shakespeare may well have proved a skilled negotiator by identifying strengths, weaknesses, opportunities and threats in people as well as the property market. And although he had a wonderful appreciation of history he must have had a very clear view on the future as well.

There were no estate agents in the early 17th century. They wouldn’t start to appear in the UK for another 250 years. So Shakespeare was on his own. Today you needn’t be. The housing market is so much more complicated now. So if you are moving home, buying to let or wanting that dream holiday home ask a well-established and reputable estate agent like us. We have the know-how and experience. We will also care about you and your blessed plot.

Please contact us on 020 8643 7777 or email at info@christiesworld.com

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After the Gold Rush

Nick Churton of our London Mayfair Global Network takes a look at the property market now the rush to avoid a higher stamp duty is over.

It happens after every major budget change where extra tax costs are involved when buying a home. There is a stampede to complete purchases before the tax axe falls. Most notable was when double tax relieve (MIRAS - Mortgage Interest Relief At Source) was removed on mortgages for unmarried couples in August 1988. This resulted in an average of two years’ worth of transactions being squeezed into a twelve month period - and a sharp rise in house prices. Sadly it also heralded a slump in activity the following year with all the negative knock-on effects to allied areas of the economy. Governments should see these things coming but they never seem to.

We have just witnessed a mini-stampede from buyers of second and buy-to-let homes pushing through their purchases before the April 1st deadline when higher rates of Stamp Duty Land Tax (SDLT) were imposed - a hefty rise when one hadn’t really factored it in before the last budget or even if they had.

Of course everyone in the industry could have anticipated this rush to complete purchases. In this area at least tax avoidance doesn’t appear to have the stigma that many other areas of this now-frowned-upon activity have.

But now comes the aftershock. Once again we can predict the outcome. Those who were serious about buying will have finalised their purchases. That leaves those who were not so serious. This group will take a little time to take stock and get used to the extra cost of buying - while some will decide not to purchase at all. This will leave a vacuum in the market for some months.

Nature and the property market don’t like a vacuum so a number of things will happen. There will be fewer motivated buyers and certain asking prices will come under pressure because of the extra cost of purchase. But the best bit is that for the first time in years first-time buyers should have a window of opportunity when there may not be so much competition from cash and/or professional property buyers. Given the low interest rates this then is the perfect time to enter the market for those with a deposit and an in-principle mortgage in place.

Every cloud has a silver lining. After the last gold rush this is the time for first-time buyers to strike it rich.

Please contact us on 020 8643 7777 or email at info@christiesworld.com

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Christies Network Auctions two day May auction catalogue announced.

NAVA Auction House of the Year Christies Network Auctions have published the catalogues for their two day auction sale in May.

The London auction will take place at the Grosvenor House hotel on Park Lane on 5th May and the Birmingham sale will be at St Andrews (Birmingham City FC) on Wednesday 11th May.

Following record sales at their last two auctions, Christies Network Auctions are expecting another successful outcome from the May sales.

With property from all over the UK (over 20 different counties) and guide prices ranging from no reserve to £750,000, there really is something on offer for everyone and some excellent investment, redevelopment and owner occupation opportunities to be acquired.

Christies Network Auctions spokesman Jeremy Richardson said: “Our May sale represents a great opportunity for both sellers and buyers to benefit from the transparency and certainty afforded by an auction. The concentrated focus of the auction removes many of the risks and delays of selling or buying by private treaty, especially in a market where uncertainty caused by the European referendum is cooling traditional activity.”

With the catalogue now closed for the May sale, Christies Network Auctions are already taking entries for their next sale in July.

If you would like to discuss how selling or buying at auction could work for you, please contact Jeremy Richardson at Christies Network Auctions on 020 8643 7777, by email at info@christiesworld.com or via our website at www.christiesworld.com

Not in the National Interest

Nick Churton of our London Mayfair Global Network goes beyond the hype and looks at what is really important in buying and selling a property this spring.

The property market is never static. But it is perhaps now at a unique juncture. It is hard to think of a time when the market was so politicised. Following on from last year's general election and the Scottish referendum in 2014 we now face the UK European referendum in June. No market likes uncertainty and on top of various recent tax changes - especially in the buy-to-let and second home sectors - these political events are certainly making some buyers and sellers wonder if they should wait for the dust to settle before moving.

But what if future events prevent the dust from settling? Perhaps after the referendum there will be something else to think about – a possible interest rate change, the US general election in November or some fresh global, economic or humanitarian crisis. The point is that our lives, although influenced by politicians, do not march to the drum of politics; they have their own rhythms - governed by personal events like leaving school or college, partnering or marriage, births, jobs, income changes, relocation, retirement, and - underlying it all - individual ambitions.

Some say there is never a perfect time to move home. But of course there is: it’s the time that is dictated by life. In or out of the European Union or despite what future events are in store we all have personal agendas that largely ignore national and international affairs as we seek to provide for our families and ourselves. We don’t move home in the national interest. We move home in our own interest - to fulfil our own ambitions. Despite what politicians may have us believe our own houses are rather more significant to us as individuals than either the Houses of Parliament in London or the European Commission in Brussels. So perhaps it’s best to forget politicians when it comes to moving home and listen instead to our hearts – and our financial advisors.

Please contact us on 020 8643 7777 or email at info@christiesworld.com

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