The date of the Government’s proposal to implement an additional 3% Stamp duty charge is drawing ever closer. With just one more consultation period to navigate, this could mean the new criteria will come into effect on the 1st April 2016.

At present the tax is levied on the proportion of the purchase price above £125,000 (which is the current Nil Rate band for a residential purchase). The new system means buyers will be taxed on the whole purchase price. Which means, if you were to buy a property for £250,000, on this basis you would attract a Stamp duty charge of £10,000. This is significantly more than the equivalent charge of £2,500 for a standard residential purchase as it stands at the moment.

Don’t Panic quite yet. This will not affect everyone.

The charge will be levied at anyone who is buying a property that is not for their residential use (i.e. a Buy to Let property), but also those people who ARE buying a property as their main residence but NOT selling their current residence simultaneously, a situation known as Let to Buy. Both of these are common scenarios for mortgage advisers to deal with, but there are other combinations that are as yet unclear as to whether they would fall under the legislation; the homeowner who had previously vacated their property and let it out and now wants to buy again, for example, or the divorcee who is still named on the ex-marital home but wants to buy a property of their own….

This new charge is part of a bigger plan to seemingly ‘free-up’ some of the property from the private rental sector and make it available to potential Homebuyers, but there is still a great deal of detail that needs to be clarified by the Government in a very short time, in order to avoid current homeowners from being unnecessarily penalised.