On 3 June 2020, the UK government announced further plans to help kick-start the UK property market by easing legislation concerning the higher rate of Stamp Duty Land Tax (SDLT) purchasers are required to pay on acquiring a second dwelling.
This will come as welcome news to those looking to buy a new home but are worried they will be unable to sell their previous dwelling within the timescale that allows them to reclaim the higher rate of SDLT on second homes.
Previously, purchasers would only be refunded the higher rate of SDLT if they sold their original dwelling within three years of acquiring their new home.
However, given the disruption Covid-19 caused to the UK property market, which included guidance against marketing properties between 26 March and 13 May 2020 (see our previous article: Open house: UK government greenlights property market restart); prospective buyers pulling out of transactions; and viewings being prevented due to self-isolation, the government is looking to encourage those who want to purchase new homes to proceed with transactions, without fear of being penalised for being unable to sell their current property.
To provide confidence to those looking to purchase new homes, the government has set out its intention to amend the legislation to permit people to reclaim the higher rate of SDLT if they are unable to sell their previous residence within three years due to "exceptional circumstances" outside their control.
Exceptional circumstances will include, among others, the impact of Covid-19 and any action taken by a public authority that may prevent the sale of a property.
Provided the previous residence is sold as soon as possible after the exceptional circumstances no longer apply, purchasers of second homes will be eligible to apply for a refund on the higher rate of SDLT.
This legislation backtracks to those who purchased a second dwelling on or after 1 January 2017 and the three-year period has expired.
If you would like further guidance on this legislation or require assistance on how to make an application for a refund to HMRC, please contact your usual client partner, or our housebuilding experts Susan Simpson, Helen Andrews or Dinah Patel.
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