Budget: Stamp Duty Technical Update

Following the Stamp Duty changes announced by Alistair Darling today in his 2010 Budget, practitioners and clients alike are asking the question: what is a first time buyer?

You should be able to find your answer here - http://www.hmrc.gov.uk/budget2010/sdlt-qa-tech-1545.pdf

In essence, the guidance splits the process of determination into three parts

What is the Land?
What is the price?
Who is the purchaser?

The answers are

The Land

The land must consist wholly of residential property being freehold or leasehold (with at least 21 years left to run) and to be used as the purchasers only or main residence.

The Price

The price must not exceed GBP250,000 for a freehold interest or the assignment of a lease and in the case of a grant of a new lease also must not exceed GBP250,000.00. Where the rent is significant and tax will be charged on it relief cannot be obtained against that amount.

The Purchaser

The purchase must be a person who intends to occupy the property as his or her main residence and who has not either alone or with others, previously acquired a major interest in land which includes residential property, or an equivalent interest in land situated anywhere in the world. An exlcusion exists in relation to land owned being leasehold where there is less than 21 years left to run.

Note for practitioners 1: You must check the completions that you have from tomorrow to ensure that all of your clients fulfilling this criteria are able to take advantage of the relief. Ensure declarations are sent to clients now!

Note for practitioners 2: When seeking to take advantage of this relief on behalf of a client purchaser the recommendation is that relief code 28 is entered into box 9 of the SDLT form.

Brendan OBrien
Wednesday, 24 March 2010

Recession finally ends but what now for 2010?

Official first estimate figures released by the ONS today confirmed what many had predicted, the UK finally pulled out of recession at the end of 2009.

Whilst on the face of it, we can breathe a sigh of relief that the worst post war recession is finally over, the weakness of the GDP figures (0.1%) casts serious doubts over the strength of the recovery.

Most economists had predicted Q4 GDP to come in around 0.4%. The reality is that the UK very narrowly escaped a record 7th quarter of recession.

It has to be borne in mind that this is a first estimate for GDP and that all first estimates have been revised since 2007 so it may very well be that in coming months we will see Q4 GDP revises upwards to nearer 0.3% . That being said the figure has shocked many economists and yet again calls into question the accuracy of many of the economic surveys that have been predicting far stronger recovery.

So what now for 2010? With so much in air at the moment it is going to be very difficult to call. A general election is due within 5 months and whilst the Conservatives still lead in the polls, a clear cut victory is far from secured. A hung parliament remains a more than remote possibility and is probably one of the worst current threats to economic recovery. Tax rises and spending cuts are just over the hill and the removal of monetary stimulus is only a matter of time. Add to that the thorny issue of inflation and the way ahead for 2010 is far too difficult to predict.

So far as the housing and remortgage markets are concerned, much is going to depend on public reaction to the media headlines on our technical exit from recession.

Property is always a confidence game. Following the 1990s property market recovery was subdued for many years because the public lacked the confidence in the market. This time around we have not yet seen the vast wave of repossessions and negative equity issues and therefore the public may feel more confident about the future of the property market

The remortgage market will be dictated by the publics attitude to the imminence and likelihood of interest rate rises. We still consider that BoE rate rises will occur during 2010 but the anaemic GDP figures may have an effect of the public perception of the timing of rate hikes and therefore we may see a continuation of the subdued remortgage market in the first half of 2010.

We welcome comments from others as to their views on the property/remortgage markets as a result of the GDP figures.