There is just four weeks left for the official consultation period set by the government over its controversial proposal to levy a three per cent stamp duty surcharge on the purchase price of most buy to let and second homes.
To the surprise of almost everyone within the industry, the government launched the consultation exactly a week ago on the Bank Holiday Monday between Christmas and New Year; here is our report from that day that appeared on Estate Agent Today.
The closing date for the consultation is February 1 - just four weeks today. The final shape of the surcharge will be revealed in Chancellor George Osborne’s next Budget in March, just before the implementation of the new duty from April 1.
The document makes it clear that the higher rates will only apply to purchases of additional residential property - buy to lets and second homes - which complete on or after April 1 2016. If contracts exchanged after November 25 2015 - when the surcharge was first announced - then the higher rates will apply if the purchase is completed on or after April 1 2016.
You can see the consultation document here.
It discusses issues that have exercised the agency industry in the past few weeks, including joint ownership, married and civil partners, buying properties by parents for their children, what happens when a completion is delayed, and so on.
There is also consultation over how Multiple Dwelling Relief and/or SDLT may be applied in cases of multiple property purchases, as well as the treatment of large scale investors.
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It's a consultation that many agents will have views on, yet theajority will gail to spend 20/30 minutes reading, first hand.
A big shocker is where there is an overlap time when ordinary sellers/buyers will fall into
...... where buyers/ sellers will fall into their sale falling through or being delayed and falling into higher SDT, having to find the extra 3% until they can later gain refund.
If enough don't comment then such bits will get rubber stamped.
The big flaw is that HMRC haven't addressed 'back to back' deals. Lease Options, etc. Such vehicles allow trading to gain substantial profits, from the side-lines.
Seems like a sneaky move to publish on the 28th December. Like Trevor implies, it needs reading and responding to.
Here is my response
Dear Sirs
I generally disagree with this measure which I do not believe will meet the government's objectives of encouraging home ownership.
This is because by penalising private landlords supply is likely to be limited and build to let through institutions encouraged, leading to a higher proportion of households going into the PRS on a long term basis.
I further believe that penalising private landlords is a direct attack on aspiration and a betrayal of Conservative party values and its supporters.
I feel this measure can only be seen in conjunction with other measures such as the restriction on higher rate tax relief for mortgage interest, another unfair, misguided and possibly illegal measure which taxes turnover rather than profit.
However, in terms of this consultation, I will confine my comments to the following questions on the basis these measures are going ahead regardless
Question 13:
Do you agree that an exemption should be available to individual investors as well as all non-natural persons? Alternatively, is there evidence to suggest any exemption should be limited to only certain types of purchaser? If so, which types of purchaser?
Yes I believe there should be an exemption for individual investors on the basis that it is irrelevant whether a corporate body, individual or institution is making the investment.
Question 14:
Do you think that either the bulk purchase of at least 15 residential properties or a portfolio test where a purchaser must own at least 15 residential properties are appropriate criteria for the exemption? Which would be better targeted?
A Portfolio test of at least 15 properties would be more appropriate than a bulk purchase test of at least 15 properties.
Question 15:
Are there better alternative or additional tests that could be used to better target an exemption and fulfil the government’s wider housing objectives?
Any Landlord who sells a property to a first time buyer should be exempt from paying the charge on their next purchase on the basis that there activities are adding to, not taking from the owner occupied sector
Question 16:
Are there any other issues or factors the government should take into account in designing an exemption from the higher rates?
A simple test based in unit numbers ignores value, so 15 units in the north of England will be far less valuable than in the south.
There should be simple mechanisms in place to allow individual investors to band together in order to make larger investments without being classified as collective investments and the consequent red tape of FCA regulations.
There are already solutions being proposed for this approach but what is needed is clarity so people know where they stand.
Finally, however well intentioned, the Government is blundering around in an area vital to our way of life without taking the time to properly understand the consequences of their actions.
This consultation is too rushed and if there is not a rethink the outcome will be a Germanic market dominated by institutional build to let, something totally in conflict with most people's aspirations and way of life. There are other ways to solve the housing shortage without throwing the baby out with the bath water.
I am available to help and advised if asked
Regards
Simon Shinerock
If you wish to make your views known to the consultation team, here are the email addresses:
sdltadditionalproperties@hmtreasury.gsi.gov.uk
stamptaxes.budget&financebill@hmrc.gsi.gov.uk
Emailing the team will ensure your voice gets heard and the legislation gets amended accordingly
great post.
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