Enforcability - Higher Stamp Duty for Second Homes

xylophone

As chris_m suggests, it does seem likely that there will be a provision to recoup the extra stamp duty if disposing of the initial property within a certain timeframe. Much is still not clear about this change, but that is pretty clearly expressed in what has been made public.

Re the consultation see

https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

davidmcn

HouseBuyer77 wrote: »

Why? Unless you bought your property many years ago all of the relevant records are electronic. HMRC will have records of the stamp duty you paid on the previous property so it would be a simple matter to check if you still own that property when your new stamp duty form comes in.

Not that simple - they might be able to get a rough idea, but there are so many holes that I doubt it's worthwhile unless they have grounds for suspicion.

SDLT only came into force in 2003 (and was paper-based initially) so I don't know that they even have reliable records of every return submitted, and plenty of ownerships will predate it. The return forms don't require unique identifiers for each property which will match up with Land Registry etc information, so checking the current ownership may be tricky. Gifts, inheritances, low value purchases etc don't require an SDLT return to be submitted so they won't know about those owners. Anything bought in Scotland since last April will have been taxed by Revenue Scotland rather than HMRC. And so on.

eddddy

HMRC use algorithms/strategies to flag suspicious income tax returns for further investigation. I imagine they will do the same for SDLT returns.

Obvious strategies for scoring suspicious purchases might include:

- Cross check purchaser names with electoral register 6 months after purchase. If the purchaser isn't on the register, flag for investigation - as possible BTL/second home.

- Identify postcodes which are heavy BTL/second home areas (based on SDLT returns). Flag any 'sole residence' purchases for investigation.

- Cross check purchase price with purchaser's income (using NI number provided on SDLT return) Somebody earning £60k p.a. is unlikely to be buying a flat for £50k as their sole residence.

Marshall_Man

mither wrote: »

I don't intend to tell my solicitor about having another property as I wont be telling the estate agent either. My view is that they would then think they have some power over me as they know I'm desperate to complete.

I think 9 weeks is realistic anyway so don't see too much of an issue.

Why wouldn't you tell your solicitor? They work for you and will be able to advise you best. Lying to a legal professional isn't probably the most effective way to work with them... Could also cause problems if/when they find out.

Also 9 weeks could be achievable for you - but your vendor might not be able to keep to it.

Angie_B

Marshall_Man wrote: »

Also 9 weeks could be achievable for you - but your vendor might not be able to keep to it.

Especially if you are buying a leasehold flat. The chances of getting everything sorted and completing on a leasehold flat within 9 weeks is pretty slim I would imagine, unless the seller already has the leasehold information pack, the flat is empty and there is no chain upwards.

Otherwise, and especially if the freeholder is a LA, in my experience of buying and selling flats in London, you are going to be hard pressed to do it all in 9 weeks.

mither_2

Thank you for all of your responses. Some really helpful information there. If I do decide to go ahead then before commencing will do all I can ti satisfy myself that the seller has a good chance of completing in time.


On the basis that 9 weeks is not enough, as suggested above, should we expect to see SOME of those considering buying second homes (BTL landlords, Holiday homes etc) to drop out of the market in a few weeks? I stress some as clearly for some the extra stamp duty won't be such a deterrent.


There is some speculation that once BTL LL's exit the market demand will be reduced and prices may drop. I'm not so sure this will happen in London as demand remains so high.


It likely wouldn't deter me too much either as I don't have too much choice and there is always the possibility of selling my house up north and reclaiming the extra stamp duty paid.

alchemist.1

Marshall_Man wrote: »

Why wouldn't you tell your solicitor? They work for you and will be able to advise you best. Lying to a legal professional isn't probably the most effective way to work with them... Could also cause problems if/when they find out.

Also 9 weeks could be achievable for you - but your vendor might not be able to keep to it.

Why do you think?

They will have a duty to report tax evasion if he does.

SMS63

We are looking to purchase a second BTL flat in London at the moment but based on experience of closely watching flat prices in our area It would appear that vendors and estate agents are upping their prices (the estate agents being on commission after all) on the basis that landlords will be desperate to buy before the stamp duty increase. We have decided to wait because I think prices will drop after April even allowing for the increased stamp duty that will be payable as part of the purchase calculations.
I did hear that the increased stamp duty was being challenged as unlawful in the courts - does anyone know how far this has got?