While numerous changes and alterations to UK stamp duty<\/a> have been called for by those within the property industry as a way of stimulating or rebalancing the market, the one that was announced back in March may not have been what many had in mind.<\/p>\n Since 2011, UK property buyers have been able to claim multiple dwellings relief when buying more than one property in either a single or a linked transaction, making their stamp duty bill sometimes considerably cheaper. However, as of 1st June, this relief has now been scrapped.<\/p>\n An exception is where a purchase exchanged contracts before 6th March but completes later than the 1st June cut-off. But any buyer looking at purchasing more than one property now – which could include investing in multiple units within a block, or buying a home with a ‘granny annexe’ – can no longer make use of this relief.<\/p>\n The vast majority of buyers – from homeowners to property investors – will not be affected by this stamp duty change, as HMRC has pointed<\/a> out that it is not a very widely used tax relief claimed by buyers.<\/p>\n Property investors who used the relief to invest in several units at a time with the same developer are the most likely to be affected, as they may have made use of this option to reduce their stamp duty bill, as well as those who are buying a property which includes an additional, separate building that could be used as accommodation.<\/p>\n The reason the stamp duty tax relief had been brought in in the first place was to help support the private rented sector<\/a>, by encouraging investors to buy multiple rental homes at a reduced cost and boost housing supply in the sector. However, an external evaluation had found “no strong evidence that it had done so”.<\/p>\n It was also noted that the relief was being “regularly abused”, with some people making spurious claims that didn’t truly qualify for multiple dwellings relief. As Matt Spencer, tax partner at Kingsley Napley LLP, pointed out when it was abolished, removing the relief prevents buyers from illegitimately paying less tax by claiming a property had an annexe.<\/p>\n \u201cThe ability for those buying the kind of luxury house that legitimately includes more than one \u201cdwelling\u201d to reduce their SDLT is not something many people will disagree with. By abolishing the rule, however, it will impact a relatively small number of legitimate transactions.<\/p>\n “The investor buying multiple flats, for example, will now be at a disadvantage unless they can buy at least six [and claim commercial SDLT rates]. The rules therefore will now disadvantage certain investors.<\/p>\n \u201cThe change in rules also, in a roundabout way, closes down the \u201cloophole\u201d that allowed those purchasing commercial property alongside multiple dwellings in a single transaction to pay sometimes very low SDLT rates [sometimes close to 1%].\u201d<\/p>\n While the government has claimed that multiple dwellings relief has not made a significant difference to property investment<\/a>, its abolishment has also led to a fresh raft of calls for a stamp duty shake-up, with arguments that more should be done to encourage investment to boost housing supply.<\/p>\n David Hannah, group chairman of Cornerstone Tax, has called the tax relief change a “missed opportunity”, and accused the government of instead implementing a “stealth tax” for the construction industry that does little to aid the sector.<\/p>\n \u201cMDR was first implemented as means to incentivise bulk purchases and provided developers with a suitable avenue for delivering low-cost homes,” said David Hannah. “At a time when demand for affordable housing has skyrocketed, the government should look to create fresh incentives for developers, instead of abolishing old ones.<\/p>\n \u201cThe decision by the Chancellor to increase the tax that developers are forced to pay from 1-2% to 5% will have a seismic shift across Britain\u2019s construction sector, leading to project abandonment and further increases to asking prices as supply continues to lag behind an overwhelming demand for affordable housing.<\/p>\n “Don\u2019t be fooled, this is a stealth tax increase with a paper-thin justification laced over the top of it.”<\/p>\n He also added that the Chancellor has missed an opportunity to reform the private rented sector, which could have included abolishing the second home stamp duty surcharge for property investors in the rental sector, or reinstating full mortgage interest tax relief, which was removed under Section 24 in April 2020.<\/p>\n Hannah pointed out that this would have reduced the cost of purchase, incentivising investment, and could also have helped towards reducing sky-rocketing rents in the sector<\/a>, which have arguably been pushed up as landlords are forced to pass on their additional costs to tenants.<\/p>\n Read more UK property news here.\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" A change to UK stamp duty that Chancellor George Osborne announced in the Spring Budget has now come into effect in England and Northern Ireland. While numerous changes and alterations to UK stamp duty have been called for by those within the property industry as a way of stimulating or rebalancing the market, the one… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":6030987,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[4,2,26,6],"tags":[85,329],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6101149"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/comments?post=6101149"}],"version-history":[{"count":5,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6101149\/revisions"}],"predecessor-version":[{"id":6101159,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6101149\/revisions\/6101159"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media\/6030987"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media?parent=6101149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/categories?post=6101149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/tags?post=6101149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Will it make a big difference to your stamp duty bill?<\/h3>\n
Government “should incentivise” investment<\/h3>\n