Buy-to-let stamp duty loophole

As most of you are no doubt aware, stamp duty on second or more residential purchases now incurs an additional 3%. To get around this buy-to-let landlords are looking at semi-commercial and commercial property as stamp duty rates are much more favourable, as they do not incur this additional fee.

As you can see from our updated buy-to-let calculator a £275,000 residential property, as an example, would attract a £12k stamp duty fee whereas a commercial property at the same price would only be £3.25k.

 

 

 

 

 

 

 

 

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For those wanting to dip their toes in the commercial property waters, a flat above a shop has been billed as a good “amateur” investment. This is because the flat would attract the lower stamp duty rate as it is part of a mix use property and also you are hedging your bets by having both a buy-to-let and a commercial unit in one property. One of the issues though with buying commercial properties was the cost of mortgages, but these are starting to come down which makes this type of investment even more attractive.

Non-residential property typically includes:

• Commercial property such as shops or offices
• Agricultural land
• Forests
• Any other land or property which is not used as a dwelling
• A mixed use property is one that incorporates both residential and non-residential elements

Before anyone jumps in on this to beat the stamp duty increase, make sure you do your research as commercial is very different and needs to be properly understood.