Thursday, 25 March 2010

Stamp Duty update


I thought it might be fun to call HM Customs and Revenue to ask them how to identify first time buyers.

It looks like I am right about them distinguishing marks. One suggestion that if they had borrowed money on mortgage they would be missing an arm and a leg seemed initially promising but eventually had to be dismissed.

The chappie I spoke with was very friendly and said, with commendable understatement, that he had had a fair number of enquiries about the new rules.

He said that at the moment individuals had to certify themselves as first time buyers on their Stamp Duty Land Tax return.

"But just suppose", I said, "that one of these dear people said that they were first time buyers when they were not." Unthinkable, of course, but you never know.

This would be their responsibility. It would be on their conscience for life. It is unclear whether a solicitor who knew a client was telling lies could be held responsible for wrongly completing a form on their behalf.

There are of course several legal ways round this anyway, so who needs to break the law?

Here are some ideas for you. They might work or they might not. They are less easy if mortgage finance is involved. No warranty is given.

If there are two purchasers and only one is a first-time buyer, then buying the property in that person's name followed shortly afterwards by the other taking a half share, will mean no duty is payable if the property is worth £250,000 or less.

If you have a tame but penniless first time buyer, and two non first-time buyers who want to buy a property, then a sale to the penniless buyer with loans from the others, followed by two separate sales of half shares in satisfaction of the loans, should once again lead to no duty being paid.

But the fact that anyone who has given this 10 seconds' thought realises it is completely unworkable is a sad reflection on Government and (as the idea was nicked off the Conservatives) opposition intellectual capacity.

Planning the Future?

With the election coming up it is instructive to look at the Conservative opposition's plans for planning reform. To sum up, they are a terrible mess. There is a lot of cuddly language, but any idea of seeking to ensure that there is a half decent supply of new housing will be dumped in favour of locally set development plans generated by self-selected "local people" who are unlikely to be people seeking accommodation, but rather those who wish to protect the status quo.

The idea that councils will be able to retain 6 years' council tax in its entirety - which for most councils means a bonus of around 4 years' tax will lead both to accusations of the council being bribed by developers whilst the scheme not actually being an incentive as it is just not enough money.

At the same time, it will be "easier" for developments to take place where a "significant majority" of the immediate residential neighbours raise no objection. Quite what this means as most properties have just four or five such neighbours is hard to see. In practice this will mean abandoning the current test of planning harm in favour of a system based on neighbours bothering to object. Where people are inarticulate or disempowered, anything will be allowed, whilst in areas where residents are aware of what is going on and how to object, nothing will ever happen.

They also consider that it is possible for large local projects to be designed through a collaborative process. The problem with that is that where such collaborative processes are tried out, each choice made by those involved leads to support withering away. It is not a good way of dealing with contentious sites.

It seems to me that what is set out in the Green Paper is designed to appeal to middle class voters who want development in other places. It will do nothing to alter the current underprovision of new dwellings, which the Shadow Planning Minister recently rightly pointed out was at the lowest peacetime level since 1924, and far from empowering local communities, it will politicise and therefore corrupt town planning and will take away from owners of land the fundamental right to use their land according to their wishes, so long as no harm is done to others.

It is no surprise that this is a mess as there seems to be no-one doing any thinking at the moment. Since my last posting, about the Stamp Duty changes, it has been pointed out to me that the poorly considered idea for reducing duty for first time buyers came from the Conservatives and was nicked by Mr Darling for his last Budget.

Wednesday, 24 March 2010

The Budget - not of this world.

Fresh from the Department of Silly Ideas is the provision that "first time buyers" will be allowed to escape 1% Stamp Duty Land Tax on properties purchased for between £125,000 and £250,000.

The rules are:

• The purchaser - or all purchasers if buying jointly - must be buying their first home

• They cannot have previously owned another property anywhere in the world

• They must be buying somewhere that will be their only or their main home

• The completion date is on or after 25 March 2010 and before 25 March 2012.

The question is: how will anyone be able to check up on this? I have over the years seen many people buying property, some for the first time, and others for the second and subsequent times; and I could not tell them apart purely on that criterion. Unfortunately, or maybe not, second-time buyers do not have green hair, or warts on the ends of their noses.

The good news: people who have title deeds to bits of the moon won't have to worry about that.

Wednesday, 17 March 2010

O tempora, O mores!


What would Cicero have made of the dumbing down of the Land Registry? Certainly patienta nostra has been most certainly abused: "You are 25th in the queue...."

Not long ago, you could ring up the Land Registry which dealt with your area and chat to someone who knew what they were talking about or who could shout across the office to someone who did.

But in the last year that has all changed. Now there is a Customer Support line staffed by Customer Support Agents. When they are not answering the 'phone are they spying on the Stamp Duty Office or inflitrating the Council of Mortgage Lenders?

Standards have definitely dropped. Courtesy and friendliness are still there, but the edge has gone from the expertise.

In addition, a number of offices are being closed. That isn't so much of an issue as no-one ever visits Land Registry offices any more; but one can't help wondering if this is affecting morale.

The reason for the closures is the economic downturn. But what will happen when things recover? Sadly the answer is likely to be massive delays. The Land Registry deal with things very quickly generally, and we are used to this.

It is probably too late to stop the centralising of Land Registry resources, but what about a contact line for practitioners aimed perhaps at those who have finished the Ladybird Book of Land Registration?

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