The world of Mortgage Capacity Assessments is always changing and this month is no exception – Changes to Stamp Duty Land Tax came into affect on 1st April 2016 which will effect those purchasing Buy to Let properties and second homes. The new rates of SDLT for these purchases are as follows:

Purchase price of property  – Buy to Let/ Additional Home Rate

£0 – £125,000   –  3%
£125,001 – £250,000  –   5%
£250,001 – £925,000  –   8%
£925,001 – £1.5 million   –  13%

There are certain exceptions to the new rates such as those purchasing caravans or houseboats and any purchases under £40,000.00.

Furthermore, SDLT is not payable if you transfer an interest in land or property to your partner as part of an agreement or court order because you are divorcing. However, I often come across situations where during divorce it has been agreed that 1 party, often with wife, will remain in the former marital home, often because of children or because this party can not afford/is not in a position to take out a mortgage on their own. Therefore, the other party, often the husband, will stay on the mortgage at the former marital home but will also need to purchase themselves a new home. This second purchase will of course be classed as a second home and will therefore be subject to the new Stamp Duty Land Tax rates.

It is important for all of those dealing with divorce to understand the financial consequences of these decisions which could be significant.