Penalised Stamp Duty critic returns to theme of “we pay too much”

A well known critic of stamp duty has returned to his long-standing theme of querying whether buyers have paid too much because of errors by conveyancers.

David Hannah, chairman at the Cornerstone Tax advisory service, says: "It comes as no surprise to see that stamp duty payments have soared over the past two years. This is indicative of the price and activity boom which we saw in the housing market during this period. 

“… However, at a time when both residential and commercial property owners are seeing their budgets slashed due to the current economic climate, it's vital that people are not overpaying on stamp duty. It is often unfortunately an area that is overlooked or misunderstood - our data even found that almost one-in-seven homeowners feel they paid too much stamp duty in error, with a further 61 per cent admitting they have never stopped to consider whether their payment was in fact correct.”

Hannah was in the news in April 2021 when The Times reported that he had been ordered to repay £30,600 stamp duty he had avoided plus a penalty of over £17,000. You can see that report here.

Hannah’s latest comments have come following the government’s release of official Stamp Duty Land Tax statistics for 2021/22 showing that the total paid to the Treasury soared by 63 per cent from £8,670 million to £14,100 million. 

The biggest increases were seen in the residential sector, rising by 69 per cent between financial year 2020 to 2021 and 2021 to 2022, from £6,010 million to £10,170 million. 

Hannah claims that many buyers overlook or fail to understand stamp duty; his company’s survey found that 14 per cent of people took out short-term loans or emergency credit to cover the cost of unexpected stamp duty payments. 

Meanwhile a high profile property expert says stamp duty paid by non-UK residents Teheran they buy a home in England or Northern Ireland should be doubled.

Under current rules foreign buyers must pay a two per cent surcharge and up to an additional five per cent if the property isn’t going to be their main home.

But National  Association of Property Buyers spokesperson Jonathan Rolande says the government should increase this to “level up” the market.

He says: “To many wealthy foreign buyers based in high income and low tax locations, this does not, in reality, appear to serve as much of a disincentive. In fact, the brief but significant collapse in sterling after the mini-Budget was a huge discount for foreign buyers. 

“If buying at £500,000 in January ’22 versus January ’23, a US, Hong Kong or Saudi based buyer would have saved £50,000 making the minor decreases in UK property prices irrelevant. With the UK property supply crisis really acute this makes the matter of coming up with ways of helping UK citizens all the more urgent.”

Rolande continues: “My feeling is that there is scope to increase the SDLT from two per cent to, say, four per cent - this would potentially discourage buyers and level the playing field further. Even if it did not do that it would bring in additional funds for the Treasury which, either way, is not a bad thing. It could impact prices at the very top end of the market too in London especially and many would see that as a price worth paying.

“We obviously need to handle this matter carefully. Preventing foreign purchasers, or even forcing them to sell property already owned would send a shockwave through the economy and severely damage the UK market. It should also be considered whether that would be fair as 400,000 UK citizens own property abroad.

“But foreign ownership is reducing available stock in the sales and rental sector and pushing up prices. And, if other inequalities in housing are not addressed, this will continue to be a pressing issue for many. Right now we need to think bigger in terms of our ideas around housing and how to generate supply for those who still want to enter the market.”

According to the latest available data overseas nationals own almost 250,000 homes across England and Wales. In the current market, that is £90.7 billion worth of property, suggesting that the UK remains a safe haven for foreign homeowners.

On a regional basis, London is home to the highest value of foreign owned homes, with the 85,451 properties belonging to overseas homeowners equating to a total value of £45.3 billion.