Developers avoiding stamp duty

So are they saying your house is effectively built on someone else's land if the builder never owned the land.
 
I rather suspect they are talking about building licence agreements. If so, this story is spin masquerading as news reporting.

Building License agreements are commonplace; they have been used for a variety of reasons (not always, and not solely, to save stamp duty) since the 1970s, and longer for all I know.

More significantly, the existence of a License Agreement is recited on every deed of transfer in every housing estate where the arrangement applies, and always has been. In the circumstances, it is nonsense to talk about the Revenue "investigating" it. They are (and have always been) perfectly well aware of such contractual arrangements.

It is (in my opinion) nonsense to refer to it as a "loophole", at least to the extent that the use of the word "loophole" suggests some underhand, surreptitious or unfair use of the existing tax code. This is a legitimate, transparent and long established transaction structure.

The Real Story (conspiracy theorist version):

When Charlie McCreevey reduced CGT to 20%, the tax yield went up significantly. There is a cut-off point beyond which tax rates strongly affect people in their decision as to whether to go ahead with a transaction. This lesson simply has not been learned by our policymakers.

I rather suspect that increasing the Stamp Duty rate from 6% to 9% has proved counter-productive. So now the bureaucrats who formulate policy have to explain why.

They sure as heck aren't going to say "stamp duty tax take on development land is down because we got it wrong; putting up the tax rate made Building Licence Agreements much more attractive and caused many more builders to use them;"

Instead, they will say they have "discovered" a loophole (and I don't know how to characterise this as mere spin - it is plain dishonest) and then say that further legislation is needed to "prevent abuses".

If this plays out in the manner which I expect, it will by no means be the only example of our policy makers drawing a very capricious line in the sand as to their definition of abuse of the tax system.
 
Is a license agreement allowed when it comes to building Apartments or are they only allowed for building houses
 
I believe that banks are reluctant to fund projects that are being done via licence, particularly larger developments. I had heard of a situation where the original owner passed away in the time frame between the developer starting work but before final contracts with the end users were signed.
 
Oops, forgot to answer your question: yes, licences can be used for apartments.
 
thanks lobby. God that would have been a sticky situation to be in where the land owner died.
 
Looks like this so called "loophole" is about to be closed off. Building Licence in most circumstances will soon become subject to Stamp Duty.
 
Pg. 2 of today's Sunday Times (main section) says that this loophole will be closed off in the Finance Bill.
 
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