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Nice Little Government Earners

23 April 2009

Given the pressure on the Government purse, it’s not surprising that there weren’t any significant changes in the Budget to two nice little earners - Stamp Duty Land Tax (SDLT) and the payment of rates on empty properties, says Kent lawyer Andrew Gough.

Andrew, partner and head of commercial property at leading regional law firm Furley Page, comments: “When it was introduced in 2003, SDLT opened the Treasury coffers to a considerable increase in revenue.

“However, there are two issues that could well have been addressed. One was the British Property Federation’s request for a concession on SDLT charged on block purchases of properties. Currently, transactions are linked and the prices are aggregated and invariably charged at a four per cent rate even though the individual purchase price might be below the SDLT threshold. This is seen as a disincentive to invest in the property market – particularly the acquisition by pension funds and other investors. However, this change has been ignored.

“The other concerns higher rates of SDLT charged on the whole of the purchase price.   While we welcome the extension – until December 31 – of the minimum threshold of £175,000 before SDLT is paid on residential property, another opportunity has been overlooked. 

“By tapering the rate of duty paid at each rate and just applying the higher rates to the excess amount in each band, it could have stimulated the property and retail markets (closely linked to home buyers and people on the move) by giving buyers more money in their pockets. On a property valued at £450,000 and currently taxed at three per cent, the SDLT is £13,500. If banding had been introduced the duty would be £6,750.”

There is also the continuing burden of the payment of rates on empty properties, adds Andrew who points out that this is an increasing problem for landlords whose commercial units are becoming vacant because of repossession or tenants vacating.

Over all not a budget with bold moves designed to stimulate the property market.

For further information contact Andrew Gough on 01227 763939.
 

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