An already complex regime is to become even more challenging.
It can be difficult not to look back nostalgically to pre-1997 when stamp duty was charged at a modest 1% on any purchase price over £60,000.
The following decade saw the introduction of some relatively gentle changes and then everything started to become much more complicated, and much more expensive for buyers.
We now have an SDLT regime that is a patchwork of different rates and surcharges, introduced over the last few years in piecemeal fashion. It’s a complex regime that can prove challenging for tax lawyers to navigate, not just property lawyers.
It’s in this context that the government’s latest consultation, outlining another proposed change to the SDLT matrix, closed early last month. It proposes a further 1% surcharge for non-residents acquiring residential property in England and Northern Ireland.
As the outcome of the consultation is awaited, property lawyers continue to accumulate CPD points on day long training courses, grappling with the minefield that the application of these rules has become.
Throughout the uncertainty surrounding Brexit, overseas buyers have continued to be active in the prime central London market, capitalising on the weakness of sterling, whereas UK resident buyers have been understandably more hesitant.
Research published by Hamptons International indicates that foreign buyers accounted for 57% of those buying residential property in prime central London in the second half of 2018.
To date, these overseas buyers have reacted philosophically to the introduction of punitive SDLT rates for overseas buyers so perhaps it’s unlikely that a significant number of them will be deterred by a further 1% charge.
Overseas buyers have been particularly important in sustaining the new development market with many international investors, particularly those acquiring off-plan properties, buying property for their children to occupy when they come to the UK to study.
It has been by securing sales on these sorts of new developments that developers have been able to bring new homes to the market for domestic buyers.
It therefore seems odd that the government’s view is that this new surcharge will somehow assist UK residents in getting onto the housing ladder and that purchases of property by non-residents are pushing up house prices for those UK residents. Is the government really looking at the bigger picture? Not surprisingly, the consultation does not ask for views on the appropriateness of introducing a new surcharge at this point in time. There has already been a climb down of sorts; when Theresa May originally announced ahead of the Conservative party conference in September 2018 that she was considering a non-resident surcharge, there was talk of it being up to 3%.
The response to the consultation and resulting legislation will be monitored carefully by the property industry as it braces itself for the addition of a further layer of SDLT legislation.
Lisa Bevan, Taylor Wessing (l.bevan@taylorwessing.com)
An already complex regime is to become even more challenging.
It can be difficult not to look back nostalgically to pre-1997 when stamp duty was charged at a modest 1% on any purchase price over £60,000.
The following decade saw the introduction of some relatively gentle changes and then everything started to become much more complicated, and much more expensive for buyers.
We now have an SDLT regime that is a patchwork of different rates and surcharges, introduced over the last few years in piecemeal fashion. It’s a complex regime that can prove challenging for tax lawyers to navigate, not just property lawyers.
It’s in this context that the government’s latest consultation, outlining another proposed change to the SDLT matrix, closed early last month. It proposes a further 1% surcharge for non-residents acquiring residential property in England and Northern Ireland.
As the outcome of the consultation is awaited, property lawyers continue to accumulate CPD points on day long training courses, grappling with the minefield that the application of these rules has become.
Throughout the uncertainty surrounding Brexit, overseas buyers have continued to be active in the prime central London market, capitalising on the weakness of sterling, whereas UK resident buyers have been understandably more hesitant.
Research published by Hamptons International indicates that foreign buyers accounted for 57% of those buying residential property in prime central London in the second half of 2018.
To date, these overseas buyers have reacted philosophically to the introduction of punitive SDLT rates for overseas buyers so perhaps it’s unlikely that a significant number of them will be deterred by a further 1% charge.
Overseas buyers have been particularly important in sustaining the new development market with many international investors, particularly those acquiring off-plan properties, buying property for their children to occupy when they come to the UK to study.
It has been by securing sales on these sorts of new developments that developers have been able to bring new homes to the market for domestic buyers.
It therefore seems odd that the government’s view is that this new surcharge will somehow assist UK residents in getting onto the housing ladder and that purchases of property by non-residents are pushing up house prices for those UK residents. Is the government really looking at the bigger picture? Not surprisingly, the consultation does not ask for views on the appropriateness of introducing a new surcharge at this point in time. There has already been a climb down of sorts; when Theresa May originally announced ahead of the Conservative party conference in September 2018 that she was considering a non-resident surcharge, there was talk of it being up to 3%.
The response to the consultation and resulting legislation will be monitored carefully by the property industry as it braces itself for the addition of a further layer of SDLT legislation.
Lisa Bevan, Taylor Wessing (l.bevan@taylorwessing.com)
