As rare as hen’s teeth…

Budgets that are silent about SDLT are like buses; as rare as hen’s teeth, then two come along within four months of each other. That said, today’s Budget announcements were not utterly devoid of interest from an SDLT perspective.

First there was no announcement that transactions involving both residential and non-residential property will no longer be treated as if they were entirely non-residential. The top SDLT rate on a house bought with a genuinely agricultural field is only 4%, but, if bought without the field, the top rate is 12%; so this is something of a surprise. I wonder how long it will be before the Chancellor changes the rule and requires the price to be apportioned and the residential rates applied to the part of the price attributed to the house. This is what used to happen when Disadvantaged Area Relief (abolished two years ago) was claimed on mixed property, so there is a precedent.

Of longer term interest was the Office for Budget Responsibility’s report, also published today. It says this about SDLT.

“Stamp duty land tax (SDLT) is forecast to rise strongly over the forecast period from £10.9 billion in 2014-15 to £18.9 billion in 2020-21. The strong growth reflects the combination of tax rate thresholds that are fixed in cash terms with a 19 per cent rise in residential property transactions and a 34 per cent rise in house prices.”

These predictions show that SDLT is expected to raise more revenue than Capital Gains Tax and Inheritance Tax combined in every one of the forecast years. Equally interesting is the OBR’s confidence in the sustained purchasing power of UK house-buyers, despite what it calls “mortgage-rationing” resulting from implementation the Mortgage Market Review. It expects the rationing effect to continue throughout the five year forecast period. Does the forecast 34% rise in house prices betray a lack of confidence in the house-building industry’s ability to make significant inroads in the county’s housing shortage?