Landlords have lost a back-door stamp duty relief worth around £1,500 on buy to let property in disadvantaged areas in Chancellor George Osborne’s Budget 2013.
As politicians and the press focus on other issues from the Budget, like the confused Help To Buy program, few have noticed that disadvantaged area stamp duty relief has been swept aside from April 6, 2013.
Losing the relief affects around 30,000 homebuyers a year, many of whom are buy to let landlords.
The relief set stamp duty rates at zero for homes valued at up to £150,000 in government designated disadvantaged areas (DAR). Around 200 DARs were in place around the country.
The aim of the relief was to encourage homebuyers to buy in rundown neighbourhoods of towns and cities and to take up empty homes.
Scrubbing the relief will add an extra £40 million or so a year to government revenues.
The relief ends on April 6, 2013 – the start of the new financial year – and applies on residential property purchases up to midnight on April 5, 2013, providing the relief is claimed by submitting stamp duty forms prior to May 5, 2013.
A government tax review advised the Chancellor that removing the relief would have no effect on home purchases in disadvantaged areas.
DAR saved buy to let landlords £1,500 on the purchase of a flat, house or home above a shop or other commercial premises valued at £150,000.
The latest Land Registry figures reveal the average price of a home in England and Wales was £162,441 in January 2013; so many homes exceed the value of the relief.
Disadvantaged area relief was popular with landlords as it reduced the buying costs on popular two-bedroomed terrace homes and flats in areas that were often in neighbourhoods close to shops and amenities in city and town centres.
The Office of Budget Responsibility (OBR) recommended withdrawing disadvantaged area relief as part of an ongoing review of tax reliefs and allowances considered past their sell-by date.
