September 27th, 2019. Mark Hughes
Should Stamp Duty Land Tax Be a Seller’s Responsibility?
There were reports earlier this summer that there could be stamp duty land tax changes, again. Will this happen and, if so, what will change? We summarise the happenings here.
What Are the Proposed Stamp Duty Land Tax Changes 2019?
In August, The Times newspaper reported that the Chancellor of the Exchequer, Sajid Javid, had proposed the idea of shifting the responsibility of paying stamp duty land tax (SDLT) onto the seller, making purchasing property considerably cheaper.
This claim has since been denied, but this hasn’t stopped those in the industry from speculating if this may happen someday, and what this would mean for the industry.
More speculation about stamp duty this morning. To be clear, I never said to @thetimes I was planning to put it on sellers, and I wouldn’t support that. I know from @mhclg that we need bold measures on housing – but this isn’t one of them. https://t.co/9OVk3XiqMd
— Sajid Javid (@sajidjavid) August 18, 2019
What Would This Mean for the Property Industry?
- In 2018, HMRC secured £8.669bn in duty, £802m less than the previous year.
- Stamp Duty Land Tax has been changed 13 times since 1999.
Currently, the SDLT regime is geared towards first-time buyers, with varying levels of additional financial liability depending on the value of the property in question. For some, this means moving is out of reach due to stretched affordability, which creates somewhat of a bottle-neck amongst mid-range properties.
However, a change to SDLT to try and relieve this congestion will be the latest in a number of updates which could degrade confidence and confuse both buyers and sellers. Currently, these rumours only pertain to residential property. However, in theory, it could also apply to commercial space.
This could mean fewer people wanting to move, meaning fewer opportunities for buy-to-let developers or flippers, as well as an increase in advertised prices in order to recoup costs. An increasing number of commercial spaces would likely be retained and rented too, rather than being moved on when no longer required.
Whatever way it is paid, the only true winner is HMRC.
The Royal Institution of Chartered Surveyors (RICS) is, therefore, calling for a full-scale review of stamp duty land tax, requesting the government defines what it hopes SDLT will achieve and whether the current system works.
So, What Happens Next?
When questioned, Javid said to wait for the Budget this autumn, so we have a few weeks to wait before we know more. However, with the help of our commercial mortgage brokers, we’re sure any switch in liability should not affect your finance options greatly.
Article By Mark Hughes
September 27th, 2019
Mark has 15 years’ experience within the financial industry working for high street banks and specialist brokers and now focuses on Bridging finance and Second charge loans.
He would describe his style of brokering as being heavily based on knowledge and efficiency.See more articles by Mark