Conveyancing solicitors welcomed confirmation in the budget that they will not shoulder extra responsibility for enforcing payment of stamp duty on additional residential properties. However, concerns have been raised about the impact of the reforms on the private rental sector.
The higher levy of three percentage points above current stamp duty land tax rates comes into force from 1 April.
The government originally proposed an exemption for large-scale investors in order to encourage an overall increase in the housing supply. But following a consultation on its plans, which attracted 909 responses, the Budget 2016 document states that ‘significant investors’ will not be exempt from the higher rates.
In its consultation, the government asked whether a set of questions designed by HM Revenue & Customs for conveyancers to use with clients would aid compliance with the new levy. But the response confirmed that the onus to ensure the contents of SDLT returns are correct will remain on the purchaser. Conveyancers will be provided with written guidance and online calculators to deal with additional administrative obligations.
The announcement also softens the blow of the tax by allowing purchasers replacing a main residence to claim a refund of the higher rate if the previous main residence is sold within 36 months, double the government’s original proposal of 18 months.
The government will extend reliefs available from an annual tax on enveloped dwellings and 15% higher rate of SDLT to equity release schemes, property development activities and properties occupied by employees from 1 April.
Reform of non-residential rates came into effect last Thursday. Calculations change for freehold and leasehold premium non-residential transactions so that the rates apply to the portion of the purchase price within each band.