The unwritten law of unintended consequences crops up regularly in my job. I have never expected to be writing a blog about stamp duty land tax as this is not something that a Family Lawyer usually has to even consider! However, the government is proposing to levy an additional stamp duty land tax on people who are buying a second or additional property. The proposal is up for consultation as I prepare this blog and the consultation finishes on 16 March. The new tax is proposed to be operative from 1 April; an extremely tight time scale given that Easter intervenes.
Family Lawyers are concerned that the proposals may well catch people going through divorce or separation. I am sure that this was not intended but nevertheless, as currently drafted, this will be the case.
Consider this scenario. Spouses are separating and it is intended that the wife will remain in the home until the children finish full time secondary education, a not uncommon situation. At that point the property will be sold and the net proceeds split by agreement between the separating couple. The husband therefore remains on the title deeds – as he has to because the lender will not release him. However, he is able to get a second mortgage and therefore intends to buy another home. Unfortunately, under the new legalisation as drafted he will be deemed to be a second home owner and as such will have to pay an additional 3% stamp duty land tax on the purchase price. This is penal and very difficult for people to find at a time when finances are often stretched to breaking point as they are on a divorce. Hence stamp duty land tax is now a matter that Family Lawyers have to consider as it will have an impact on how people approach issues on separation.
There is much more I could say about stamp duty land tax as many of the provisions of the new tax are controversial but I have to leave that to my fellow property lawyers who are far better qualified to do so than me…..
Written by Stephen Root of Berwins Solicitors.