Buying a second home: the complete guide

If you’re considering buying a second property, you may be aware that the government recently introduced new stamp duty rates, but how will they affect you and your new purchase?

As part of the government’s plan to help first-time buyers to get a foot on the property ladder, in April this year they introduced new higher rates of Stamp Duty Land Tax for anyone buying an additional residential property, including second homes and buy-to-lets.

Anyone buying an additional property for more than £40,000 will be required to pay an additional three percent in Stamp Duty Land Tax. This could include a holiday home, a buy-to-let investment property, or even a home that you intend to use as your main residence in the future. It also applies to any ‘share’ in a property if that share is worth more than £40,000, so don’t think you can escape the new rates because you only own part of a property. It also includes international properties, so if you own a holiday home in Spain and want to buy your first home in the UK, you’ll be stung by the Stamp Duty hike as officially your main residence is an ‘additional’ property.

So, what are your options? If you’re keen to avoid the Stamp Duty Land Tax hikes, you might want to try one of these solutions:

Buy land and build your own

Stamp Duty Land Tax, and the new higher rates, only apply when you’re buying a residential property. Buying a plot of land, even if you intend to build a residential property on it, is not counted as buying a residential property, and therefore Stamp Duty is not payable.

There are some stipulations when it comes to buying an ‘off-plan’ property (ie. where the purchase contract provides for a residential property being built), so it’s important to gain independent legal advice, but choosing to ‘built it yourself’ is definitely one option to avoid the extra Stamp Duty costs.

Buy a holiday lodge

If you’re looking for a second home to use as a holiday property, either for personal use or as a buy-to-let investment, holiday lodges can be a great option as they are completely exempt from Stamp Duty Land Tax.

Forget the run-down caravanning holidays your parents took you on as a child, the UK holiday lodge market has had a makeover and the new buzzword is ‘luxury’.

Because you buy the lodge, but not the land the lodge sits on, there is no Stamp Duty payable. What’s more, UK holiday lodges have fantastic holiday let potential. According to a national newspaper, 72 percent of Brits chose to stay in the UK for their holidays last year. With a weakening pound and recent global events, this statistic only looks set to increase in the next few years. The financials look good too, with many holiday lodge management companies are now offering an annual return of six to eight percent, which traditional savings and investment products simply can’t compete with.

If you’re interested in buying a UK holiday lodge, Quick Move Properties provide a Park, Plot & Home Finder service that can manage the whole process for you; making your purchase quick, smooth and hassle-free. Using almost 20 years of expertise and experience, Quick Move Properties can help you find the right holiday lodge, in your ideal location. For more information contact Quick Move Properties’ friendly team today on: 01793 840917