“Buy-to-Let investments will benefit from George Osborne's reforms, boosting landlords' returns with savings of up to 26% on stamp duty” comments Sevi Rixson from Urban Student
Whilst immediate reforms by George Osborne in changing the stamp duty tariffs will ultimately benefit 98% of households in the UK, the ‘buy-to-let’ market will also see substantial savings across the board; helping investors gain further investment leverage, improving returns, decreasing barriers to entry whilst increasing liquidity.
Previously, stamp duty rates were set into bands, which many referred to as a ’slab structure‘. Progressively higher rates applied with properties tipping over into the next band being charged the entire rate for that ‘slab’ on the whole property price.
Previously a buyer purchasing a property for £250,000 would have paid £2,500 or 1% in stamp duty. But if the price was just £1 more at £250,001 the entire property would be liable to 3%, having just snuck into the next band and an overall stamp duty charge equating to an extra £5,000.
From midnight on 3rd December 2014 the new rates of stamp duty means that the purchase price will fall into a number of particular duty bands making it more like income tax. There will still be no tax on purchases up to £125,000, with the remainder of property value falling into one or more of the four main bands.
Under the new rules, the tax will be applied on the balance of the remaining percentage. So, on a £135,000 house purchase there will be no tax to pay on the first £125,000, then 2% on the remaining £10,000; which would then equate to £200, making a saving of £1,100 over the old scheme.
Sevi Rixson from student property investment specialist Urban Student comments: “Overall the new position on stamp duty is very good for the investment market and ‘buy-to-let’. The student accommodation sector in the North East, which is where we have a good portfolio of properties, is extremely buoyant right now and in this sector our investors can make substantial savings on stamp duty. We are fortunate to operate right in the ‘sweet spot’ where the greatest benefits exist and where the greatest savings can be made in the £250,000 to £500,000 property price brackets.”
Example #1 - Investment Property @ £275,000
Example #2 - Investment Property @ £510,000
There has never been a better time to look at the student investment ‘buy-to-let’ sector and now with savings to stamp duty, coupled with excellent rental yields and the fastest appreciating property prices in the UK this is a really exciting time for investors.