The government had to introduce the higher stamp duty for UK landlords, say The Treasury

Landlord Expert
By Landlord Expert April 19, 2012 14:38

Institutional property owners, including the Duke of Westminster’s Grosvenor Estate, have said the introduction of a 15 per cent stamp duty levy for houses worth more than £2m – and bought through companies – will both damage their ability to invest and make the UK less attractive to foreign business.

Legitimate property-owning businesses have hit out at the government for what they say is an ill-conceived measure that means that at 15 per cent they will pay double the 7 per cent rate of stamp duty that private housebuyers pay.The higher tax rate, ushered in at last month’s Budget, is part of a clampdown by chancellor George Osborne on what he has dubbed “morally repugnant” stamp duty avoidance. The idea was to curtail wealthy individuals using corporate vehicles to avoid paying the tax.

 

“These are not trivial sums to any business and it is an uneven pitch now if we are buying something over £2m,” said Hugh Seaborn, chief executive of Cadogan, the £3.5bn property estate owned by the Earl of Cadogan.

 

Mr Seaborn said Cadogan had delayed completion on a mews house it was planning to add to its 500-strong portfolio, which sprawls across Chelsea and Knightsbridge, until it had more clarity over any concessions for residential property companies. “It has been clumsily implemented and will hurt legitimate business. It damages London, which, more than most places, needs flexible, high-value accommodation to attract overseas workers.”

 

Grosvenor said it would be significantly affected by the increased stamp duty rate when adding to its £2.5bn estate and that it was talking to the Treasury about how the tax will be implemented.

 

Cordea Savills, a £250m fund launched to invest in high-value residential property, said it would step back from making acquisitions while it negotiated with the government to find a solution. London First, a lobby group, will write to the Treasury this week to ask it to rethink the 15 per cent stamp duty levy.

 

In the draft letter seen by the Financial Times, London First, whose members include Bank of America Merrill Lynch, UBS and KPMG, warns that the tax will deter foreign companies from buying homes for their workers in London.

 

Other businesses have been forced to pull back from purchases while they wait to see if the government adapts the tax rules to facilitate legitimate corporate house buying.

“[The charge] as currently drafted will harm bona fide businesses, risking unintended and damaging consequences,” the letter says.

 

The Treasury said the government had introduced the higher stamp duty “to tackle the ‘enveloping’ of high-value properties into companies to avoid paying a fair share of tax.

 

Landlord Expert
By Landlord Expert April 19, 2012 14:38

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