In the Autumn statement last week we all know it was confirmed that the Stamp Duty Land Tax break for first time buyers would end next March.
Conveyancers like Fidler and Pepper and others have already started waiving the marketing flag to encourage first time buyers to accelerate their plans to buy before the deadline or miss the opportunity but unless there is a u-turn on the policy any upside will be gone before Spring becomes Summer and first time buyers will face stamp duty costs in most parts of the country.
The measures that the last Government under took to unblock the housing market didn’t seem to work and there appears considerable uncertainty over whether the mortgage indemnity scheme will really encourage chains of properties to form and complete.
About the same time last week we were being bombarded by conveyancing panel managers who were positive about stamp duty land tax avoidance schemes wanting us to encourage conveyancers to accept work from them and grow the market.
We were told to look at barristers’ websites, consider insurance policies that would protect the client from all fees and costs associated with these schemes if everything went wrong and encourage conveyancers to act to allow their clients to avoid stamp duty land tax by using off shore vehicles. We were told that until the Government closes the loop hole that allows off shore companies to be used to avoid SDLT there would be no repercussions for professionals involved.
When times are tough some conveyancers feel the pressure to take on such work.
At Today’s Conveyancer we can’t comment on whether these schemes are legal or what sanctions if any may one day be brought against conveyancers involved. We would merely observe that at a time when the country is on its knees burdened with debt and in need of every last tax pound that it can raise that we would not choose to do this type of work if we were in practice.
Clearly the very few cash rich clients that are out there and in particular those that are seeking to spend money on £1M plus properties are a ripe target for many firms.
Many of the issues associated with lender panels are due to historic issues that firms got involved with in the good times. Firms that took risks and believed developers when they were told it was ok for people to buy off plan and then flip the property on build complete at much higher prices. Firms that listened to brokers who said they would certify all the identification for the clients even though they lived hundreds of miles from the broker or lawyer.
Looking at the systems that lenders and risk managers now have access to acting on a below market valuation scheme, on an SDLT avoidance scheme, or receiving work from a broker that a lender is worried about is enough to have your lender panel position reviewed.
Whether it is stamp duty avoidance or any other marginal work where you need to be told why it complies with the regulations you should consider whether when lenders find out they may use it as a reason to walk away from your firm.
In a few years a new Government or a new broom in HMRC may want to come back and revisit the legality and ethics of stamp duty avoidance schemes and what looks attractive now because it provides work in the short term may end up being something that results in regulatory investigation and consideration. Some schemes will no doubt sail through and be fine, others may not be.
Be careful about what work you chase in these challenging times because firms are being closed today for things they did in the past. Whilst there may not be much work around the straight forward tradtiional conveyancing referred from your known and trusted sources might be much better for you in the longer term than some of the clever schemes that might have worked in the good times. Now everything you do is being watched so you may want to be careful.