Member Article

New SDLT rules a ticking time bomb

A leading residential property lawyer in the Midlands, Alison Wacey, says residential property purchasers are confused and panicked and the government must urgently provide clarity on the detail and the implications of new Stamp Duty Land Tax rules set to be introduced on the 1st April.

“Confusion, and panic, amongst residential property owners is rife,” says Alison, a partner in the residential property team at the Stratford upon Avon office of Midlands and South West law firm Lodders.

“The focus so far seems to have been on the impact of the changes on landlords and buy-to-let purchases alone,” she says.

“The people who have been overlooked in the debate are the private buyers, and panic is beginning to set-in – in the last week, we have seen a huge spike in instructions from people desperate to complete purchases before the end of March, and I fear this panic is only going to increase without the government providing much-needed clarity as a matter of absolute urgency.”

The ‘forgotten many’, according to Alison, are couples buying a home together before they’ve sold their existing properties; parents or grandparents buying a home for their children; plus of course anyone buying a second home such as a holiday cottage.

So far, what is known is that from the 1st April, there will be an extra 3 percent of SDLT due on additional properties, such as second homes, investment property and buy-to-lets. So for a property sold for £125,000 an extra £3,750 would be due, despite the fact that if this was a single home, there would be no stamp duty due.

Alison explains: “A husband and wife is seen as one unit when it comes to SDLT on property purchases, and this is a real issue and area of confusion.

“The government hasn’t made the tax liabilities clear for such a single unit who in my experience are very often parents buying a home for children to live in whilst at university or to help them get onto the property ladder, or people who find themselves temporarily with two homes whilst the sale of their existing home completes.

“It is these types of scenarios that fall outside of the easier definitions of investment or buy-to-let purchasers.

“SDLT will be due immediately on the purchase of a second home and there will then be an 18 month window in which to sell the second property and claw back the stamp duty from HMRC. In particular, this is an additional challenge as actually securing tax refunds can frequently be a long, drawn out and frustrating process that in turn leaves individuals out of pocket until the matter is concluded.

“Now more than ever, home owners and buyers need an experienced conveyancing specialist to ensure all the options are identified and explored, and tax implications made clear,” says Alison.

“The government has only a few weeks before the Budget on the 16th March to make clear the guidance and advice on the new rules, to counter the confusion and halt the panic.”

Lodders Solicitors LLP is an established and thriving law firm based in Stratford upon Avon, Cheltenham and Henley in Arden. The firm is recognised as a leading private client law firm, offering specialist advice to both private individuals and privately owned businesses, including its highly regarded work in the agricultural and real estate sectors. For more information: www.lodders.co.uk.

This was posted in Bdaily's Members' News section by Lodders Solicitors LLP .