The Tail Wagging The Dog

Since last week’s article petrol prices have increased to 161.2p (at the time of writing), and are set to increase further. How much of this increase is due to actual reduction in supply and how much is from propaganda is debatable. Furthermore, last month lenders have pulled 500 rates following the base rate rise, fixed rates have now increased; expect more rounds of this to follow, iteratively as the base rate steadily rises. There is even more reason to fix your rates at the moment if you’re on a floating rate, or even if it is about to expire in 3-4 months. Even though rates have just risen, they are historically still very low. With the expectation of further rate rises, this would be a prudent move. We still have some exceptional deals both on a BTL and residential basis.

Currently, we are revisiting a transaction we dealt with over a year ago to relook at the stamp duty which has been paid. We have had an initial consultation with a firm who thinks there could be an over payment in this regard.

Ordinarily, the lawyer who acts for the conveyancing decides on how much should be paid. I have seen from experience that often they don’t check for applicable reliefs and are ill equipped to advise on stamp duty, yet they still do so.

Clients normally trust their lawyers implicitly to get this correct. Yet this trust is unjustified when it comes to Stamp Duty Land Tax. There are over 40 reliefs which can be used. There is also the interpretation of this relief, which can also change with time, as new case law redefines the exact meaning. To be fair this is a niche and specialised area, and it is difficult to be a master of all.

The transaction we are now revisiting paid a stamp duty as per a mixed-use building, being part commercial and part residential. I have since been told it could qualify from further relief. However, talk is cheap, and so let’s wait to see if an actual rebate of cash is actually due.

I have spoken to an accountant cum property developer on this subject at length, and there are many areas of relief, which are unintuitive and very surprising; even, for example, for a pure residential property for personal use.

It is always worth approaching a specialist firm to check on this point, especially when the transaction value is high.

Currently, there is a client who is looking for a property for ￡6M to purchase, for his parents. At this level the structure is almost as important as the purchase. If you get this wrong it could end up being a very expensive mistake.

It needs to be thought of in a 360 degree manner; and, after all being said and done it is also important to ensure the tail does not wag the dog!

Suresh Vagjiani