The many developers in the prime residential areas of London will be left with thoughts of what might have been as the 5% increase in stamp duty land tax (SDLT) from 7% to 12% for high-end properties could knock six figure numbers off returns from both existing and planned developments.
“The reason for this is a potential double hit”, explains Vince Wood
, tax partner at Moore Stephens. “First a further 5% is added to the purchase cost and then, to the extent the final customer seeks to off-load this extra cost on the developer, the total hit on profits will be not only 5% on the purchased price but possibly 5% off the sales price as well.
“This could lead to a further increase in the number of commercial premises being converted to residences, since commercial property is not affected by the changes.”
Real Estate team
Business Tax team