Stamp Duty & Land Tax Explained

When it comes to bying a home, there are a lot of expenses you need to take into consideration. Along with legal costs and agent fees, it is likely that you will also have to pay stamp duty or land tax.

Here is everything you need to know about how land tax works and how much you will have to pay on your next home.

ENGLAND & NORTHERN IRELAND

What is Stamp Duty?

Stamp Duty - or Stamp Duty Land Tax (SDLT) in official terms - is charged to buyers in England and Northern Ireland when purchasing a residential property or piece of land, that costs more than £125,000, or £300,000 for first-time buyers. This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

How much is Stamp Duty?

Stamp Duty is calculated based on the value of the home. The table below explains how the rate you pay varies depending on the price of the property.

To help make sense of the price brackets, if you bought a property for £350,000 for example, the Stamp Duty payable would be 0% on the first £125,000, 2% on the second £125,000 (£2,500), and 5% on the final £100,000 (£5,000) – so in total you would pay £7,500.

It is important to keep in mind that a higher rate of stamp duty applies to the purchase of additional properties like buy-to-lets and second homes costing more than £40,000. 

You can use HM Revenue & Customs Stamp Duty calculator to work out how much tax you will need to pay.

What if I’m a first-time buyer?

Following the 2017 Autumn Budget, Stamp Duty has been scrapped for first time buyers in England and Northern Ireland, on properties up to the value of £300,000.

A reduced rate of tax will be applied for properties up to £500,000, where first time buyers will pay 5% tax on the difference.

So, to break it down, this means that if you’re purchasing your first home at a cost of £350,000, the Stamp Duty payable would be 0% on the first £300,000, and 5% on the remaining £50,000 (£2,500) – so in total you would pay just £2,500.

How and when do I pay Stamp Duty?

Stamp Duty must be paid to HMRC within 30 days of taking possession of your new property. In most cases your solicitor or conveyancer should be able to help you with this but if not, you will need to contact HMRC directly to make the payment.

HMRC accept several different payment methods including by phone, online at your bank or building society, at the post office or you can pay by cheque.

If you fail to make payment within 30 days, HMRC may charge you a penalty fee and/or interest.

Are there any exemptions?

You may be eligible for tax relief in certain situations, which can reduce the amount you pay.

For example, Stamp Duty doesn’t apply if you have been left a property in a will or receive it as a gift – however other taxes might apply (such as inheritance tax). You will also be exempt if the property has been transferred to you following a divorce, separation or the end of a civil partnership.

Visit the gov.uk website for the full list of Stamp Duty exemptions.

SCOTLAND

What is Land and Building Transaction Tax?

In Scotland, when you buy a property or a piece of land that costs more than £145,000 you will pay Land and Buildings Transaction Tax (LBTT) instead of Stamp Duty.

How much is land tax in Scotland?

Land tax in Scotland, like in the rest of the UK, is calculated on a percentage basis, however the thresholds are slightly different. The below table sets out the tax percentage you will pay for each price band.

It is important to note that an Additional Dwelling Supplement tax applies to the purchase of buy-to-let properties and second homes of £40,000 or more.

You can work out the amount of LBTT you will need to pay on your next residential property purchase with Revenue Scotland’s tax calculator.

How and when do I pay LBTT?

Your solicitor will usually make the arrangements for your LBTT to be paid, however if they don’t, land tax returns can be submitted using Revenue Scotland's online portal, or manually by completing a paper LBTT form and paying by cheque. Revenue Scotland do not accept payment over the telephone or by cash.

If you fail to make payment within 30 days of taking possession of your new property, you will be charged a penalty fee. Full details of how to make a payment can be found here.

Are there any exemptions?

There are several types of land transactions which are specifically exempt from LBTT or that offer tax relief.

If a piece of land or a building has been gifted, or the ownership transferred to you (like in a will for example) you will not have to pay land tax. You will also be exempt if the property has been transferred to you as a result of divorce, separation or the end of a civil partnership.

Take a look at the Revenue Scotland website for the full list of LBTT exemptions.

Are you thinking about putting your property on the market, but aren’t sure when or how? It can be difficult to know exactly when you should sell your home. However, there are times and seasons when selling your home is almost certainly the right thing for you. Whether your reasons are personal or market-driven, we’ve identified some of the best times to think seriously about selling your property. 

1. Your family needs more space

Your family may not be expanding, but if the people in your house are growing restless, it’s time to consider a change. As young children grow into young adults, many parents move into properties where each child can have their own room. Adding private spaces and larger rooms can also accommodate your family’s needs, so bear that in mind when you’re looking at properties. Knowing that your family needs more space is a key factor in determining if you should put your home on the market.  

2. Look to the seasons 

The autumn and spring are known for being good times to sell your property, and for good reason. Potential buyers aren’t busy with holidays and Christmas parties during these seasons. The spring coincides with an increase in sunlight and a blooming garden, both of which do wonders for the appearance of your property. In the autumn, the fading light and multicoloured leaves add a romantic touch that’s unparalleled. If you’re selling, try to time putting your home on the market with the beginning of the season. 

3. Your family is expanding 

Whether you’re expecting a child or welcoming a parent, there are plenty of family expansions that will require more room for everyone. If you know that your property won’t be able to accommodate everyone, it’s time to put your home on the market. 

4. You’re not excited to go home at the end of the day 

Is your home a place where you can rest and relax? Do you feel safe in your neighbourhood? These are all signs that it’s time to start looking for a new home. Your home should be a place where you feel comfortable and relaxed, and anything less should have you looking elsewhere.

5. The local property market is flourishing

Have you been toying with the idea of moving for a few years, but never knew when the time was right? Putting your home on the market when it is flourishing will increase your chances of a speedy sale. But how do you know when the market is flourishing? Speak to your local agent and look around your neighbourhood. Are there plenty of sold boards around? This is a good indication of the state of the property market in your area. 

6. You’re considering buying a new property

If you’re thinking of moving house, put your own home on the market first. That way, you’ll be free to make an offer when your dream home comes along. Worried that a buyer won’t want to purchase your house because you haven’t secured another home? Most buyers are very understanding, and will appreciate your honestly if you’re up-front with them about not having found another home. 

If  you are considering selling your home why not contact us now to book your valuation or click here to get an instant online valuation. 

Finding your dream home can be a challenge. If your children have left home or if you have too much space, you might be looking to downsize. What are advantages to downsizing in 2018?

The main reasons to downsize is to release equity, go mortgage free, or to live in an appropriately-sized home. It will also mean lower running costs, which can be very welcome as the cost of living rises.

Recent property price increases mean that homeowners have increased equity, which can make it a great time to downsize and cash-in on your investment.

Downsizing can be difficult because it will mean compromise. If you only want a specific location, you may have to buy a smaller house, or the benefit of off-road parking may mean you can’t get an extra bedroom. What factors are most important to you? Transport links, community atmosphere or more space?

Ultimately, the best time to downsize depends on personal circumstances. Be aware of market conditions, your budget, and be honest about your needs and requirements, otherwise you could stand to lose out financially and emotionally.

Are you thinking of downsizing? Contact your local Guild Member, Sawdye & Harris on 01364 652652 for professional advice or email them by clicking here. 

SOURCE: Guild of Property Professionals

Letting out your property for the first time can be a daunting task and there are many important factors to consider before putting it on the market. From practical advice to legal responsibilities, here are a few top tips to get you started.

Whether you are a first-time landlord or have let properties before, there are some things every landlord should know. Regulations change often which means that if you are not checking the rules, it could result in a landlord unwittingly breaking the law.   ARLA ( Association or Residential Letting Agents) have put together some excellent tips to ensure you understand your obligations and responsibilities as a landlord, and how to protect your property, keep your tenants happy and deal appropriately with any issues as they arise.

 Preparing your property

As a first step, you should undertake any maintenance which needs to be done. Your property will be more attractive to prospective tenants if it’s had a fresh lick of paint, all repairs are done and if necessary, new flooring has been installed. Next, you should decide whether to let the property furnished or unfurnished. If possible offer both options, so that the agent can market it to a wider audience.

Do your homework

First thing’s first, get to know your market. Research similar properties in the local area and find out how much they are being let for per month. If your rent is set too high, or too low, prospective tenants will steer clear. Think about your target demographic and consider for whom your property would be suitable; for example, young families, students or single professionals. Your agent will be able to advise on this. Once you’ve done your homework, set a competitive price and aim to keep it filled at all times to minimise rental voids. 

 Know your responsibilities

By renting your home, you’ll go from being a home-owner and occupier to a landlord, and with your new status, comes great responsibility. In the first instance, check that your mortgage allows you to let out your property, as some agreements include caveats to prevent homes from being rented. If you are unsure, speak to your mortgage lender and they will be able to advise you accordingly.

Being a landlord is a 24/7 job, so you should be prepared to receive calls from your tenant at any time during the day or night, as some issues will need immediate attention such as if there is a gas leak or broken boiler. You will be accountable for all repairs and maintenance and taking care of refurbishment of the interior and exterior of the property when required, unless you agree for your letting agent to manage the property – in which case they will deal with all minor issues.

Insurance

Your existing buildings and contents insurer must be made aware of your intention to let your property, as it’s likely that your policy will need to be amended. While specific landlord insurance isn’t a legal requirement, it is advisable as the policy will protect the building, your tenants and your investment as a whole - some policies will also pay out if your tenant misses their rent payments.

 Vet prospective tenants

You may wish to meet potential tenants before agreeing to let them your property, or you may prefer to leave it to your letting agent.  Letting agents perform reference and credit checks on potentials tenants to ensure everything is reliable.

Legal requirements

When it comes to being a landlord, there are more regulations to comply with than you can shake a stick at. To put it into perspective, there are currently around 150 laws that landlords need to adhere to while letting a property.  At the start of a tenancy agreement, landlords must carry out right to rent checks in line with immigration laws, protect deposits and have all the essential paperwork in place. Whilst not a legal requirement, it is certainly a very good idea to have a written tenancy agreement so that both you and your tenant understands their rights and responsibilities.

The safety of your tenants is very important, so you must undertake a Gas Safety check every year. It’s also a good idea to make sure all electrical appliances and wiring are tested regularly too. Finally, it goes without saying that your rental property should be fitted with smoke alarms on every floor and carbon monoxide protectors where necessary.

By law, you will need an EPC (energy performance certificate) for your rental property, and from 1^st April this year, it will need to be EPC grade E which your letting agent can help you to organise. You won't be able to market the property without one, so get it sorted as soon as possible - they're valid for 10 years.

Choosing the right agent

If you want to make the process pain-free, use an agent to manage your property and guide you on everything you need to know. A good agent will take away the stress of finding suitable tenants and also ensure your property complies with any regulatory changes. Propertymark Protected letting agents are experienced and trained professionals who work to a code of practice in order to help landlords manage their homes.

Talk to Sawdye & Harris for peace of mind as your licensed ARLA Propertymark Proteccted letting agent - 01364 65652

SOURCE: ARLA

Do you want to sell your property? In order for your home to appeal to the widest range of potential buyers, it’s a good idea to identify its strengths and weaknesses. Every property is different. Your home might have beautiful windows and a state-of-the-art kitchen, but be in desperate need of a fresh coat of paint. We’ve identified some common property weaknesses, and how you can turn them into strengths. 

Weakness: The windows in your home are outdated and tired. 

The Fix: Outdated windows can show the age of your property, and even make it look out of date when it isn’t. Hanging new curtains is an easy way to update your property. Install a simple metal rod with decorative finials and hang a neutral curtain with metal rings. Your home will look like a magazine, and what was once a weakness has become a strength. 

Weakness: Your kitchen needs an update. 

The Fix: Purchase new white goods for your kitchen. This will add plenty of value to your home, and keep prospective buyers from being put off because your appliances are past their prime. When you’re updating, think stainless steel. These appliances are popular and modern. 

Weakness: There are lots of small, ‘awkward’ spaces in your home.

The Fix: Hang a large mirror. Mirrors can make any space seem larger, so they’re especially important in an entryway or narrow hallway. Is the space too awkward for a large mirror? A gallery wall of mirrors in different sizes will solve that problem perfectly. 

Weakness: Your house looks old.

The Fix: What do you do when your house has been standing for over 200 years (and looks like it, too)? A fresh coat of paint and a top-to-bottom clean can work wonders to turn a rustic property into a character-filled dream. Highlighting the period features of your property is also a good idea. That way, the house becomes historic, not just ‘old’.

Weakness: There’s nothing in your property. 

The Fix: A few accessories go a long way. While it’s great that your property doesn’t have much in it (an empty canvas makes it easier for potential buyers to imagine themselves in your home), having a few accessories (think throw pillows and a light fixture or two) can make a huge difference in your home’s atmosphere. Use neutrals, and try visiting your local charity shop to make your improvements on a budget. 

Weakness: Your home is the priciest home on the street. 

The Fix: Whether you meant to or not, you’ve bought the most expensive home in the area and are now trying to sell. In this situation, take a look at your home. Why is it pricier than other homes in the area? Once you recognize why your home has been valued at a high price, highlight those features as unique selling propositions, or USPs. Turn price into exclusivity, and this weakness quickly becomes a property strength. 

Weakness: You’re extremely close to your neighbours.

The Fix: When you’re close enough to hear the neighbours next door, it can be a problem for potential buyers. Take this time to highlight the amenities that your property has close by. If you have a great relationship with your neighbours, this is the time to mention it. A sense of community is invaluable for new buyers, and proximity to amenities like a corner shop or department store are valuable assets to your property. 

Are you selling your home?  As the areas chosen Guild agent we can guide you through the buying and selling process simply call us on 01364 652652 or click here to get an instant online valuation