The Chancellor has closed a potential loophole which may have allowed some second-home owners and landlords to escape the 3 per cent stamp duty surcharge.
This rule change – which is effective immediately – should also help prevent divorcing couples being hit by these higher stamp duty rates.
They will be exempt from this surcharge if they keep an interest in the family home, for example under a ‘property adjustment order’ but have moved out and bought their own home.
It will also ensure that this surcharge is not levied when properties are bought for children in trust, who are subject to Court of Protection orders.
These changes – which were contained in the supplementary Budget documents – are cost neutral, suggesting the loophole was not widely used.
This amendment means homeowners will no longer be able to avoid this surcharge, simply by selling part of their main residence, or selling their property to a spouse.
After these amendments come into force, homeowners must sell their entire residence or else pay the higher stamp duty rates when purchasing another property.
The Government said that these changes should improve the operation of the higher rates of stamp duty.
The higher rates were introduced in April 2016, and apply to those who buy a second residential property and are not replacing their main home.
The higher rates are 3 per cent above the standard stamp duty rates.