The new stamp duty rules took effect on 1 April 2016. For those buyers funding the purchase of a new home with the sale of an existing home, if their buyer pulls out but they still want to go ahead perhaps by using a bridging loan they will be liable for the stamp duty surcharge because they will technically own two residential properties at completion.
Although the cost of the stamp duty surcharge may be partially met by the buyer keeping the deposit paid under the failed sale contract, there could be a shortfall for the buyer to fund if they still want to proceed with the purchase of their new home.
Conveyancing lawyers must warn their clients at an early stage of the possibility of an increased tax charge.The extra tax will be repaid, but only if the previous home is sold within 36 months. For a £500,000 purchase, the stamp duty charge on a chain break will be double the amount that would be payable if a break hadn't occurred.
The new stamp duty rules could affect the ability for many newly married couples and registered civil partners to purchase their rst home together. The issue arises where one spouse already owns a property.This is because under the new rules, married couples and registered civil partners are treated as one buyer.
In essence, ownership of an existing home by one partner will affect the purchase of the couple's rst home together. For a £500,000 purchase, the stamp duty charge in these circumstances will be double the amount that would be payable if the partner didn't retain their existing property.