Partner Article

Stamp Duty Reform - Some notice next time please!

The announcement by the Chancellor on 3rd December, which stated that the rules on stamp duty were being overhauled caught most residential conveyancing solicitors I know on the hop. Within minutes of the announcement being made clients started calling our firm seeking guidance and calculations of their new stamp duty amounts.

Unfortunately, none of us had any warning that the rules were changing and being a busy volume firm, we had numerous clients in the middle of transactions, all of them wanting to know ‘how does it affect me?’ So whilst George Osborne was in the throes of finishing his speech, members of our residential conveyancing team were frantically searching the internet and calling HMRC for guidance, which was unfortunately not available for some time.

The focal resource point of our efforts to update clients became a live feed on the BBC website, with most clients being told “we don’t know yet”.

In the conveyancing world December is always a particularly busy time of year with many clients pushing to be in before Christmas. Some might argue that from a solicitor’s perspective the Chancellor couldn’t have picked a worse time to make his announcement.

When the guidance/calculators did appear on HMRC’s website it became clear that from 4 December a new tiered system was being put in place with stamp duty being calculated in a similar way to income tax with clear bandings in place. With average house prices in the North East of England around the £147,000 mark, the average saving to clients is over a thousand pounds. An amount of that figure makes a huge difference particularly to a first time buyer.

It is fair to say that on the whole most of our clients were absolutely delighted with the rule changes, with the notable exception of one client who was buying from within the two million pound plus bracket. That client’s file was worked on throughout the day and night so that exchange could take place on the 3 December and the old stamp duty rules could be utilised, producing a saving to that client of £53,000.

A large number of clients had already provided completion funds and those clients had to be refunded overpaid stamp duty in the following weeks. Bizarrely, in some cases clients actually called us to thank us for the news that their file had not yet progressed to the point of exchange or completion, something which is generally unheard of.

In short, the amount of extra work needed at any already busy time did add some unwelcome pressure for solicitors. We are now some way into January, things have settled, software calculators are in place and everyone is now up to speed with the new rules. It will be interesting to see how things go during the next six months and whether the new rules have an effect on the market.

All I would to say to this Chancellor or the next, is ‘don’t forget about solicitors’ when new rules come in to play. We have a tough job to do at the best of times and a bit of notice or warning would be much appreciated!

This was posted in Bdaily's Members' News section by Kathryn Taylor .