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TODAY'S OTHER NEWS

Agents ponder 'legal avoidance' of 3% stamp duty surcharge

Estate agents and accountants are investigating whether there are legal ways of circumnavigating the three per cent stamp duty surcharge that will be imposed on buy to let and second home purchases from April.

Charles Curran of Maskells Estate Agents says: “We will need to see the detail from HM Revenue and Customs before making our final analysis but our initial thoughts are for second homes, if you’re in a civil partnership or married, it is easy enough to buy a second property in the spouse or partner’s name.  For example, if you spend the week in London and your spouse in the country, each property could be argued as being your primary residence.”

Frank Nash, a partner at London chartered accountancy firm Blick Rothenberg LLP, says: “It is going to be challenging to police the SLDT surcharge for second homes – a purchaser could easily declare the new home as their main residence immediately.”

Buying agent Henry Pryor has tweeted that 63,000 people live at two addresses in London, apparently splitting their time between homes in different boroughs. Using 2011 Census information, he also says some 229,803 people have a second home in the capital, and 39,827 homes are used by workers with their main residences elsewhere.

Edward Heaton, of buying agency Heaton and Partners, says: “What happens if someone who buys a new home, without having sold their existing one first? Are they liable to the three per cent surcharge”. What happens if you own a share in a small holiday home in Cornwall, and then buy a large house as your principle private residence in London or the south east? Will this be classified as a second home?”

Meanwhile law firm Mishcon de Reya says the devil is in the detail in terms of identifying how the tax will be applied. 

Its post-statement verdict on the stamp duty bombshell says: “Given that SDLT on residential property is no longer based on a single fixed percentage of the entire price, the three per cent cannot simply be added to a single percentage. It appears that three per cent will therefore be added to the rate of tax on each ‘slice’, significantly increasing the SDLT due.”

  • Trevor Mealham

    If the SDT had simply been for BTL, then it would have been easy to keep moving into a new home and let the last one. All said there would have likely have been a time cap (say 12 months).

    But by adding second home - it's quite clever of Treasury . Not for the fact that Mr Smith and Miss Green will buy in separate names, but for the fact, they're, buggered at property no. 3 which can't be a primary for either.

    Agents - the big biz is going to be resales of investment stock. Agents will need to understand more BTL and investment rules to help landlords on their exit, navigate deals to newbie landlord vehicles coming in.

    Estate agency won't be about who can get a punters house on RM or Z for the cheapest fee any longer. estate agency will be greater about knowing legislation than for a long time and less about tech.

  • Jon  Tarrey

    "Legal avoidance"? Doesn't sound dodgy at all.

    Has the extra 3% stamp duty charge been extended to overseas buyers? You know, the super-rich oligarchs who are buying up stock in London and leaving it empty, just so it can rise in value. That might be a thought, to try and solve the supply issue we have.

    But don't worry, George promises us he's building 400,000 more 'affordable homes'. So all's well that ends well. As I said yesterday, it's quite funny to see Osborne going after buy-to-letters. I'm sure there's plenty in his own Cabinet who aren't best pleased about that, not to mention the wider Tory party as a whole. Where's Brandon Lewis to give his take on this? He seems conspicuous by his absence just at the moment.

  • Trevor Mealham

    It will be on UK properties regardless of where the owners main residence is

  • Sceptical As Always

    Hang on let me phone my mate at FaceBook he will have a solution no doubt...

  • Fake Agent

    Loopholes. There's always loopholes.

    This move has really backfired on Georgy boy. I really don't think he's thought it through. Will there be another Say No to George petition?

  • Trevor Mealham

    I can see more rogue traders using lease options to secure properties to sub let back out again with poss monetary tie ins on resale to normal buyers. ............

  • Rob Hailstone

    With regard to buying in a spouse’s name, we should all be wary about trying to give tax advice unless we are au fait with 'connected parties'. In my opinion, this is the first thing that HMRC will try to ensure is not possible.

    As with all other taxes, including SDLT, there are complex provisions defining 'connected parties' to include members of your family and businesses owned or controlled by you as being linked together. Again the devil will be in the detail, and we will be able to look at this more closely when the draft provisions are released.

  • Trevor Mealham

    Rob, the powers that be don't always get it 100% right first shout. My view is the 'second property' wording is there as a slip net.

    It would be very hard to associate some unmarried couples. But a singular person having more than a promary residence is fairly easy tk define.

  • icon

    Trevor, I don't think it's on Scottish properties. That is for the devolved Government in Edinburgh to decide.

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