The Government has made a U-turn on one of the areas dubbed as unfair in the introduction of additional stamp duty on the purchase second properties which came into effect on 1 April.
Although this charge was intended to catch buy to let investors and second home owners the wording of the proposed legislation was such that if a home had separate self contained living accommodation, that annex (commonly referred to as a granny flat) would be classed as a second property and be subject to the 3% surcharge. This would be the case even if the main residence was the purchasers only property.
David Gauke, the financial secretary to the Treasury, advised the House of Commons yesterday that it was not the Government’s intention to apply the higher rates of stamp duty to granny flats and an amendment will be made to the Finance Bill which is currently working its way through Parliament.
The amendment should mean that annexes when bought with a main residence will be subject only to the standard rates of stamp duty.
We will be watching closely to see if any other changes which have been highlighted as unfair are incorporated into the final legislation.
Meanwhile if you have any questions about the taxation aspects of property investment please contact me.