Notice on stamp duty reform would be welcome

The announcement by George Osborne on 3 December, which stated that the rules on stamp duty were being overhauled, caught most residential conveyancing solicitors I know on the hop.

Within minutes of the announcement, clients started calling our firm seeking guidance and calculations of their
new stamp duty amounts. Unfortunately, none of us had
any warning that the rules were changing and, being a firm with
a high volume of conveyancing work, we had numerous clients in the middle of transactions, all of them wanting to know ‘how does
it affect me?’

So, while George Osborne was in the throes of finishing his speech, members of our residential conveyancing team were frantically searching the internet and calling HMRC for guidance, which was unfortunately not available for some time. The focal resource point of our efforts to update clients was a live feed on the BBC website, with most clients being told “we don’t know yet”.

In the conveyancing
world, December is always a particularly busy time of year
with many clients pushing to
be in before Christmas. From
a solicitor’s perspective, the chancellor couldn’t have
picked a worse time to make
his announcement. When the guidance and calculators did appear on HMRC’s website, it became clear that from 4 December a new tiered system was being put in place, with stamp duty being calculated in a similar way to income tax with clear bandings in place. With average house prices in the North East of England at around the £147,000 mark, the average saving to clients is over a thousand pounds. A saving of that amount makes a huge difference, particularly
to a first time buyer.

It is fair to say that, on the whole, most of our clients were absolutely delighted with the rule changes, with the notable exception of one client who was buying from within the £2m plus bracket. That client’s file was worked on throughout the day and night so that exchange could take place on 3 December and the old stamp duty rules could be applied, resulting in a saving of £53,000. A large number of clients had already provided completion funds and those clients had to be refunded overpaid stamp duty in the following weeks. Bizarrely, in some cases, clients actually called us to thank us for the news that their file had not yet progressed to the point of exchange or completion, something which
is generally unheard of.

In short, the amount of extra work needed at an already busy time did add some unwelcome pressure for solicitors. We are now some way into January: things have settled, software calculators are in place and everyone is up to speed with the new rules. It will be interesting to see how things go during the next six months and whether the new rules have an effect on the market. All I would to say to this chancellor,
or the next, is ‘don’t forget about solicitors’ when new rules come into play. We have a tough job to do at the best of times and a bit of notice or warning would be much appreciated. SJ

Kathryn Taylor is managing partner at Gordon Brown Law Firm