A clause in the 2003 Finance Act means charities would pay stamp duty on land bought for non-charitable uses, such as building homes for sale at market prices. The duty is levied at a percentage of the land price, up to a maximum of 4%.
This would hit developments that mix social rented housing with properties for private sale. Previously, charitable associations could get relief on such developments, often used for regeneration.
Lynne Murray, social housing partner at solicitor Lewis Silkin, said she was waiting for the government to confirm that the law applied to charitable housing associations.
She said: "You might buy the land not knowing what you will do with it, and when you do know you have to go back and pay stamp duty. It increases the cost."
But Murray said she had brokered one deal where a landowner promised to pay the stamp duty incurred by an association on a land sale if required.
Steve Walker, group director of regeneration at London & Quadrant Housing Trust, said: "It's rather irritating; if we are doing build for sale we would be doing it to cross-subsidise rented homes. We are doing build for sale because there's insufficient grant.
"On the one hand the government is trying to squeeze grant, then it hits us with additional stamp duty tax."
He added that stamp duty for shared homeowners in expensive areas will increase by around £450 under the new rules.
He said: "A lot of regulations are made in general terms and because we are operating in a niche market, the powers that be do not recognise the effect it will have."
Walker will talk to the Housing Corporation, ODPM and the National Housing Federation this week in the hope of finding a solution.
Source
Housing Today
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