Recently, Rishi Sunak spoke about how badly the housing market has been affected by COVID-19. The estimated figures showed a drop in residential transactions of almost 50% when we compare May 2020 to May 2019, and we saw a fall in house prices for the first time in 8 years.
Since the market reopened and construction started again, activity has increased. And to keep that momentum, Rishi announced a temporary cut in the level of stamp duty land tax for residential properties with immediate effect until March 2021.
HOW CAN LANDLORDS BENEFIT?
It’s not just those people buying a new home that will benefit. If you currently own a portfolio of rental properties and you’re looking to transfer these into a company, or you’re planning to start or expand a buy to let business, this cut will be a welcome boost.
Before Rishi’s announcement, the level at which you paid no stamp duty land tax was £125,000. Now, that figure has been increased to £500,000.
As buy to let investors you would still have to pay the 3% surcharge on purchasing a residential property, but you may have no further stamp duty land tax to pay if the property costs less than £500,000.
By incorporating your rental business, you can benefit from the lower rates of tax that a company is charged, granting you more profit to reinvest.
So, now could be the perfect time to expand or incorporate your rental business, and if you’d like to talk through your specific circumstances, Sarah Axe or Simon Morris would love to chat.