New higher SDLT rates for community housing
Community groups may end up paying a higher rate of stamp duty when buying a residential property.
Second home owners
Budgetary changes to penalise individuals who own more than one residential property targeted corporates as an anti-avoidance measure. The new rules relating to increased SDLT (stamp duty land tax) rates for residential purchases by corporates came in to force this month. Many groups responded to the earlier consultation by the Treasury asking for an exception to be made for community-led and cohousing projects.
We hope the fact that lots of groups seem to have responded to the Treasury will at least have made them aware that there is an issue about the fairness of SDLT. We would encourage groups to speak to their MPs about the current SDLT system and how it seems to penalise community groups – if you can get one MP on board, it can help to bring pressure to bear on the government.
Impact for groups
For groups considering a residential purchase, it means SDLT is now a bigger issue in their financial planning than it was before. One positive point is that the increased rate only applies to residential buildings. It would not affect commercial buildings even if the intention were to change the use to residential once the premises are acquired. This means the purchase of an old office building/nursing home/other commercial building for housing would not attract the new higher rate and nor would the acquisition of bare land for development.
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The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors