Conveyancing Association responds to Treasury stamp duty consultation
The Conveyancing Association (CA), the leading trade body for the conveyancing industry, has today issued its response to the HM Treasury's open consultation on higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional properties.
The consultation paper was published by the Treasury on the 28th December last year and its aim is to clarify the details around the new higher rates of stamp duty and to seek views in key areas of its design. Responses were requested by the 1st February.
Covering off a number of the questions raised by the consultation, the CA stresses the importance of ensuring conveyancers are not held responsible for determining when an individual already owns a main residence, and that the individual purchaser themselves be responsible for providing the correct information, which is to be relied upon by all parties.
The Association is keen to ensure the purchaser is provided with specific questions to answer in relation to determining whether the extra 3% charge should be payable. It wants to see purchasers signing a form relating to this and declaring those answers to be correct – the CA does not want it to be the responsibility of the conveyancer to have to ‘cross examine their clients’ in this area.
In other areas of the consultation, specifically around the potential circumstances where the extra charge will be applied, the CA wants the rules to be ‘clear and easily comprehensible to ensure certainty’.
In specific cases, the CA is also keen to ensure the introduction of this policy does not impinge on the ability of individuals to purchase their own homes. For example, in the case of separated couples who have not formally divorced. At present those who are in such a situation who may wish to buy a home - which would undoubtedly be their main residence - may still be on the title deeds of their previous home.
The Association believes the new stamp duty policy does not match-up with recent divorce legislation which encourages ‘no fault divorce’ – it believes that if one of the parties ‘can’t buy another property without a punitive rate of tax being charged because they are not formally divorced that desirable outcome is effectively discouraged’.
Other areas which the CA believe need greater clarity is around parents jointly purchasing a home for their children – it suggests that the additional rates should ‘not apply if it is a residential home for any of the joint buyers’. The Association would also like to ensure trustees, who may be the legal owner of the property but have no beneficial interest in it, do not have to pay higher rates of stamp duty in such a situation.
Finally, in relation to the potential for companies or individuals already owning (or buying in bulk) 15 properties being exempt from the stamp duty increases, the CA is keen that the overall policy does not ‘discourage investors who help the rental market’. It says that the decision to introduce such an exemption at 15 properties is ‘arbitrary with no scientific basis’. If such an arbitrary figure is going to be set, the CA has suggested a lower figure of 10 however stresses that the arbitrary nature of such a decision appears to be made without reason.
Eddie Goldsmith, Chairman of the Conveyancing Association, commented: “It’s clearly very important that the Association responds to this open consultation and it has been drafted following consultation with our member firms. The large number of potential issues and examples raised in the paper itself showed how difficult this increase on stamp duty for secondary purchasers will be to introduce, particularly in areas such as separated couples, purchasing first and selling the main residence at a later date, and the over-riding issue of who might be have exemption.
In our response we have aimed to outline the unintended consequences in a number of areas, as well as stressing the fact that conveyancing firms should not be thought of as the police force in this area. The information, regarding a purchaser’s liability, has to come from the purchaser themselves and having answered the relevant questions and make a declaration, it is reasonable for the conveyancer involved to rely on that information when filling out the stamp duty form.
The CA, and its members, are concerned across a number of levels. Firstly, in terms of the clarity provided but, secondly, because the final policy design will only be announced in the Budget on the 16th March. This leaves conveyancers, and indeed the entire market, with only a very small amount of time to implement these changes before the stamp duty increases are due to be introduced on the 1st April.
One might therefore suggest that the Government seek to defer implementation of the final rules to allow all stakeholders, particularly conveyancers, to ensure they have the appropriate amount of time to comply with these new rules.”