Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK. It presently raises £10.68 billion a year for the HM Treasury. An interesting figure when compared with £27.6 billion in fuel duty, £10.69 billion in alcohol duty and £9.48 billion in tobacco duty.
In the latest set of data from HMRC, in the MP constituency that covers Boston, property buyers paid £2 million stamp duty in one year alone
However, as you may know, George Osborne introduced an additional tax for landlords and from 1st 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 was much worry and concern with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.
HMRC data released in the Summer for Quarter 2 of 2016 did seem to back up those fears as they published some worrying figures. Only one in seven properties purchased was a second home or Buy To Let. This means that in real numbers, only 30,300 of the 207,900 properties in Quarter 2 were bought by landlords.
In previous articles, I have spoken about the slump of property transactions after the 1st of April as landlords rushed through their property purchases in March to beat the April deadline. In Quarter 2 of 2016, £1.976 billion was raised in stamp duty from residential property. Of that £1.976 billion, £652 million was paid by Buy To Let landlords (£424 million in normal stamp duty and £228 million in the additional 3% surcharge).
However, looking at Quarter 3, the numbers have improved significantly. Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by Buy To Let landlords and of the £2.208 billion in stamp duty, £864 million was paid in ‘normal’ stamp duty by Buy To Let landlords and an impressive £442 million 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 £250,000 to £500,000 range and 10.9% (or 6,100 additional properties) of Buy To Let properties bought cost over £500,000. Interestingly nearly one in four (22.2%) of £500,000 properties purchased in Quarter 3 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 31st March, making figures in the following months in Quarter 2 artificially low when the 3% supplement was introduced, but in Quarter 3 the number of Buy To Let properties purchased increased by 85%.
It just goes to show you shouldn’t believe everything you read or hear in the media! I can assure you the Boston property market is doing just fine.