Housing associations in high-rent regions face paying six-figure sums to move homeless families out of temporary accommodation into permanent housing.
The alarming situation has arisen because of the resurrection of a 19th-century law by a judge in north-west London.

Judge Nic Madge has ruled in a number of recent cases at West London County Court that the 1891 Stamp Act should be applied.

This act means a court can request that stamp duty of 1% is paid on tenancy agreements made before March 2000 and worth more than £500 a year in rent – in effect, almost all of them – before the agreement can be terminated. The situation is different for agreements made after March 2000, because the threshold for stamp duty was then changed to £5000 a year.

The 1891 law has largely been forgotten about by both tenants and landlords, so presently stamp duty has not been paid on most tenancy agreements.

As a result, housing associations in areas with higher rents, such as London and the south-east of England, could face bills of up to £750,000 to clear the backlog of unpaid duty. Problems will arise during evictions because although the duty should, strictly speaking, be paid by tenants, where they are being evicted they are unlikely to pay. The responsibility would then fall on the housing association.

When tenants are being evicted they are unlikely to pay stamp duty. The responsibility will then fall on the housing association

There is also an issue for the relocation of temporarily housed families because, by law, their temporary arrangements have to be terminated in court. Similar requirements to prove that stamp duty has been paid will apply.

National Housing Federation policy officer Bob Wilson said: "The imperatives right now are to do with housing temporarily homeless people, as some housing associations are being billed very large amounts to process cases."

Wilson said NHF members faced "fairly horrendous bills", including interest payments on unpaid duty and penalties imposed by private landlords for delays in the vacation of their properties.

Source

Housing Today