Finance Bill reaffirms Government property legislation plans
Hamptons International welcomes clarity from Government on plans
to clamp down on tax avoidance through the use of Corporate
Envelopes/Special Purpose Vehicles. The business is pleased that
the Government has listened to the property industry including
representations from Hamptons International during the consultation
period, which argued strongly for exemptions from the 15 per cent
Stamp Duty levy and Annual Charge (AC) for the property development
and investment industry.
However, Hamptons International expects these changes will still result in an increase in the number of £2 million+ properties being brought to the market in the New Year prior to the introduction of the new AC on April 1, 2013. This will alter the supply and demand dynamics of Prime markets, putting further downward pressure on house prices above this level.
The new AC regime introduces an additional recurring cost to property ownership of a five yearly formal valuation, with particular importance placed on establishing the value of properties close to the Charge thresholds of £2m, £5m, £10m and £20m. The business expects activity depressions to develop just above these price levels in a similar manner to the stamp duty cut-off points.
Marc Goldberg, Head of Sales at Hamptons International, commented on how SDLT changes have impacted market confidence: "SDLT measures have taken the steam out of the previously buoyant Prime Central London market- particularly for the £2 million to £10 million market and today's legislation has further deepened the current problem."
"Hamptons International fully supports the Government plans to
clamp down on tax avoidance and accepted the increase from five to
seven per cent SDLT on properties priced at £2m+ bought by
individuals. However, as a result of these changes, we expect to
see an uplift in the number of properties priced above £2m+ coming
onto the market early next year, creating a further imbalance in
supply and demand."
Jonathan Godfrey, Director of Valuation at Hamptons International further comments "Never before has valuation been so vital to the top end of the market as there will be importance placed on establishing the precise value of properties close to the Annual Charge cut-off points. Today's measures are likely to increase litigation related to these values, reducing the actual receipts expected by the Treasury.
The possibility of long term CGT liability is a question which future owner occupiers will need to manage carefully and will increase the importance of professional valuation advice in the transaction process. "
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