HMRC needs to urgently address the lack of clarity in parts of their stamp duty guidance, which has led to unnecessary confusion for solicitors and their clients, according to Cornerstone Tax
Stamp duty – prior to the existing holiday – typically costs homebuyers in the region £13bn a year collectively, but there has been no shortage of complaints from consumers and advisers over thousands of pounds being mistakenly added onto people’s property purchases, usually by solicitors who are unsure of the rules around the levy.
It has been estimated that more than £3bn worth of stamp duty was overpaid in 2015/16 due to mistakes in advice and confusing complex rules, and yet the tax remains poorly understood.
With the existing stamp duty holiday due to end in March, the complexities of the tax are no clearer, and remain complicated, not just for homebuyers, but often the solicitors and tax advisers employed to make sense of the rules and regulations surrounding the purchase of various types of property.
Comment – It has to be worth spending a few minutes to review what you paid in stamp duty if you bought a house in 2015/16
RENTERS WANT BIGGER
There has been a notable increase in rental demand for houses as tenants rush to upsize, new research shows.
Howsy, the lettings management platform, analysed tenant demand across 22 major UK cities and found that houses are currently more sought-after as more renters generally look to get more space for their money as a growing number of people work from home.
Howsy looked at what proportion of rental properties is being snapped up by tenants and how demand differed between property types. The analysis shows that demand for houses is currently at 29% while demand for flats averages 26%.
While the current pandemic is leading this trend for more space both in the home buying and rental markets, flats are still proving more popular than houses in some cities.
Comment – Carlisle is following the trend with massive demand for bigger house, more space and gardens. Flats are proving difficult to let with low demand.
TAX INCREASES ARE COMING
The message to vendors should be to sell now before tax rates increase. Every agent in the country has dozens or even hundreds of vendors who are dithering about whether to sell their property or not. So now would be a great time to write to them or phone them. If they are selling a second home, or an investment property, you can warn them that capital gains tax rates could rise from 18% or 28% to as much as 40% or 45%. So now is a good time to sell. If they are downsizing and planning to give part of the sale proceeds to their family by way of a potentially exempt transfer, you could warn them about possible changes to the inheritance tax rules. These may well change to prevent people from giving money away in the future. It may even be worth mentioning that there have been stories in the press about the possibility of the government taxing the profit that people make when they sell their primary residence.
For landlords, most particularly those with multiple properties, you might suggest that they consider transferring their properties into a limited company in order to protect themselves against a future increase in CGT rates. Most landlords will not take action on this but they will thank you for taking the time to discuss the matter with them. Perversely, an increase in CGT rates would have the effect of locking landlords into their buy to let investments as they would be very reluctant to sell if CGT rates were to rise to 40 or 45%.
Comment – Take stock of what you’ve got and choose which direction you take wisely. Is it worth selling if you’re going to leave the money sitting in the bank with no interest growth. Might be worth taking professional advice from an accountant. Armstrong Watson can assist with expert advice on 01228 690200
An online petition calling for pets to be allowed in private rental properties has gained thousands of signatures.
The petition – on the Petition Parliament website – is from Hannah Bennett and says: “I’d like the government to prevent discrimination of tenants and potential tenants with pets, including by preventing landlords from including a ‘no pets allowed’ clause in tenancy agreements. It is completely unfair that a person and/or family can be refused accommodation based on the fact they have a pet. Most of the time people only have a small dog or cat, and it can be incredibly difficult to find accommodation as it is let alone with this clause in place.”
The petition comes as Tory MP Andrew Rosindell is promoting the Dogs and Domestic Animals Accommodation and Protection Bill in the House of Commons.
The measure – which this week has its first reading – is urging a reform of rental laws allowing dogs and other animals to be kept in rented accommodation so long as owners can demonstrate their care for them.
Comment – It’s a tricky one as there are many advantages for a landlord to allow pets such as longer tenancies, however pets can damage properties. Northwood find that a pet is only as good as it’s owner and agent’s judgement is vital.