A leading residential property lawyer in the Midlands has claimed residential property purchasers are confused and panicked as the new Stamp Duty Land Tax rules are set to be introduced in April.
“Confusion, and panic, amongst residential property owners is rife,” says Alison Wacey, 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.
Alison explained the real issue stemmed from the fact that a husband and wife was seen as one unit when it came to SDLT on property purchases. She said:
“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.
“The government has only a few weeks before the Budget on the 19th March to make clear the guidance and advice on the new rules, to counter the confusion and halt the panic.”
From the 1 April, there will be an extra 3 percent of SDLT due on additional properties, such as second homes, investment property and buy-to-lets. For example, 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.