The higher rates coming into force this April will be 3% percentage points above the current SDLT rates and will apply to purchases of additional residential properties in England, Wales and Northern Ireland.

Following consultation, the government has decided to help those moving in difficult circumstances,  such as in the event of divorce or partnership breakdown, whereby purchasers will have 36 months rather than the originally proposed 18 months to either claim a refund from the higher rates or before the higher rates will apply, in the event that there is a period of overlap or a gap in ownership of a main residence.

It also confirmed that there will be no exemption from the higher rates for significant investors, and the higher rates will apply equally to purchases by individuals and corporate investors.

A small share in a property which has been inherited within the 36 months prior to a transaction will not be considered as an additional property when applying the higher rates.

The measure was first announced at the Autumn Statement 2015, imposing a 3% surcharge on current SLDT rates on purchases of additional residential properties from 1 April 2016.

The changes to property tax, particularly for buy-to-let landlords over interest rate relief, set to come into force from April 2017, coupled with the reduction in capital gains tax rates announced in the Budget are likely to force many investors to review their portfolios and there is likely to be a shift towards company structures.

‘The major reforms to capital gains tax (CGT) will encourage investors in residential property to use company structures – exactly what the government was trying to prevent when they started to reform property taxation in 2012 to discourage corporate ownership of residential property,’ warns Nimesh Shah, partner at accountants Blick Rothenberg LLP.

‘The Chancellor announced that the highest rate of CGT would be reduced to 20% (currently 28%) but the 28% CGT rate would continue to apply for capital gains arising on the sale of residential property. However, a sale of shares in a company which owns a residential property (or portfolio of residential properties) would be assessed at 20% CGT.

‘With the restriction to interest relief for individual buy-to-let investors (taking effect from 6 April 2017), the reduction to corporation tax to 17% from 1 April 2020 and this latest change to CGT, investors in residential property will be further encouraged to use company structures.

‘This could quite easily lead to a future market among investors to trade shares in companies owning residential properties which also have the benefit of attracting a lower rate of stamp duty.’

Revenue raised from the SDLT levy will provide £60m to enable community-led housing developments in rural and coastal communities, including through Community Land Trusts, where the impact of second homes is particularly acute. The south west will receive around £20m of this funding.