Philip Syvret, Solicitor and Partner in charge of the Property Department at local lawyers Benest & Syvret, has expressed concern that a concession in respect of stamp duty for property transactions undertaken by first time buyers is to terminate on the 1st December 2012.
Presently first time buyers get relief on stamp duty for homes costing up to £450,000. From the 1st December the exemption will be limited to homes costing £400,000 or less.
Mr Syvret said “At the end of 2011 we successfully campaigned for an amendment to the 2012 budget so that first time buyers could buy a property up to £450,000 and still enjoy the substantial benefit that the first time buyers’ relief provides. If the relief reverts to properties under £400,000 I have two concerns. Firstly prices for a standard first time buyer three bedroom property remain above the £400,000 threshold. People buying on first time buyer developments designated as such by the Planning Department will not be treated as first time buyers by the Treasury Department. My second concern is that the first time buyer part of the market is an area where we continue to see relatively good activity notwithstanding a reduction in transactions in many other areas of the property market. Given the continued relatively high price for first time buyers, transactions are very cost sensitive. The impact of additional costs will be an active disincentive to potential purchasers.”
Mr Syvret went on to set out the impact of the increased stamp duty that will apply. He said:- “Take for example a young couple buying a property for £450,000 on a first time buyer only development. Until 1st December 2012 stamp duty payable on their purchase will be £1,600. From the 1st December 2012 that will rocket to £7,100. Even though Planning require that couple to be first time buyers in order to purchase on that site, the stamp duty regulations will not treat them as first time buyers at all.”
Stamp duty is the tax payable on freehold land and property transactions. Land Transaction Tax is calculated in a similar manner upon share transfer flat purchases. Mr Syvret said his comments applied equally to both stamp duty and Land Transaction Tax.
Mr Syvret concluded:-
“My first call would be to the Treasury to consider most carefully whether the increase on the ceiling for first time buyers to £450,000 should be continued at least for another year. The Treasury quite sensibly listened to our calls in 2011 to allow the higher ceiling to apply and I would hope that common sense will apply again in 2013.”
“In the meantime first time buyers who are contemplating a purchase should consider advancing their plans so as to complete before the end of November and avoid the substantial additional cost.”
Philip Syvret is a Solicitor and Partner at local law firm Benest & Syvret. He heads up the Property Department within that firm which is one of the busiest conveyancing firms in the Island. In September/October 2011 he led calls for the stamp duty ceiling for first time buyers to be raised which led to Senator Philip Ozouf agreeing to increase the ceiling to £450,000 on a temporary basis for twelve months from the 1st December 2011.