Stamp Duty increase penalises home buyers

 

There has been much press commentary regarding the extra 3% Stamp Duty Land Tax (SDLT) and the 3% Additional Dwelling Supplement (ADS) – part of the Land and Building Transaction Tax in Scotland – that applies to the purchase of a second residential property by individuals in the UK from 1 April 2016.

Home owners should be wary as this can more than triple the initial Stamp Duty costs of buying a second home in the UK. 

The rules are strictly applied. For example, if a homeowner wants to move house, but is finding it difficult to sell their existing home, they may decide to complete on the purchase of their replacement home and press on with trying to complete the sale of their present home at some future date.

The problem is, HMRC or Revenue Scotland will still apply the 3% extra duty even though the intention is to replace one property with another. At the time the replacement property was purchased, the buyer owned two residential properties at the end of the day the deal was completed. As such, the replacement purchase was a second property.

Homebuyers caught in this position should seek advice and quantify the amount of the extra duty they will have to find. However, all is not lost. It is possible to claim a refund of the additional 3% paid but there are time limits. In England Wales and Northern Ireland, the replaced property must be sold within 36 months of the replacement purchase; whereas in Scotland the time limit is only 18 months.

SDLT Additional Properties Consultation 
Enterprise and Property Tax Team 
HM Treasury 
1 Horse Guards Road 
London 
SW1A 2HQ 

or email: sdltadditionalproperties@hmtreasury.gsi.gov.uk

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Nationwide sets out MCD changes

Nationwide has outlined how it will comply with the new rules introduced by the Mortgage Credit Directive.

The society has confirmed it will use an updated KFI document, known as the KFI+, rather than the European Standardised Information Sheet.

As the MCD requires lenders to provide the customer with a binding offer and a reflection period, Nationwide will consider an offer to be binding from the date it is issued, and the customer’s acceptance of the mortgage conditions will be when the funds are withdrawn.

The reflection period will last for nine days and a customer can a customer can choose to waive this either through the lender or their solicitor.

Nationwide says it will continue to accept consumer buy-to-let cases from intermediaries signed up to the FCA’s new consumer B2L register. Additional questions on the application form will need to be answered to identify consumer B2L customers.

In April, the lender revealed it has stopped lending to new borrowers paid in a foreign currency as a result of the MCD.

The lender has launched help pages on its website detailing the changes, which will come into effect before the 26 March deadline.

Nationwide managing director of group intermediary sales Ian Andrew says: “In terms of the process, brokers should not experience a significant impact, particularly given that many of the changes needed have either been introduced at an earlier stage, such as revisions made in advance of the MMR rules, or are technical measures that have no impact on the application process or decision to lend.

“As part of the ongoing programme of communications, Nationwide and TMW will continue to offer assistance to our intermediary partners to prepare themselves ahead of the changes in regulation. This includes support through our BDMs, online and through telephone support, as well as our new Broker Chat facility, to enable as smooth a transition as possible.”

By Paul Thomas 




http://www.mortgagestrategy.co.uk/nationwide-sets-out-mcd-changes/

Nationwide to cut 95% range by up to 40bps

Nationwide will cut rates on its 95 per cent LTV fixed rate mortgages by up to 40 basis points from tomorrow.

Rates for the lender’s two-year fixes will be cut by 35 basis points. From tomorrow it will offer a 3.89 per cent product with a £999 fee and a 4.29 per cent product with no fee.

Three-year 95 per cent LTV fixed rates will be reduced by 40 basis points to 4.39 per cent with a £999 fee and 4.69 per cent with no fee.

Nationwide’s five-year fixed rates will be cut by 30 basis points to 4.69 per cent with a £999 fee and 4.89 per cent with no fee.

Nationwide head of mortgages Henry Jordan says: “As part of Nationwide’s range of measures to help first time buyers on to the housing ladder, we are reducing rates for those with smaller deposits looking for competitive mortgage deals and payment security over a range of terms.”

By Sam Barker

http://www.mortgagestrategy.co.uk/nationwide-to-cut-95-range-by-up-to-40bps/