Budget ruffles Mayfair agents

Click to follow
The Independent Online
THE usual post-Budget frenzy to stock up on goodies that have had higher taxes imposed on them has taken a distinctly up-market turn this year. Mayfair estate agents, lawyers and the like, are rushing around in a frantic scramble to beat the deadline this Tuesday for paying the Chancellor's higher rate of stamp duty on properties worth over quarter of a million pounds.

For properties of pounds 250,000 and above , the Chancellor raised stamp duty to 2 per cent from 1.5 per cent. And for properties worth pounds 500,000 or more, the rate went up to 3 per cent from 2 per cent.

It is not only residential property, of course, that is affected by this move. Commercial property is in the same boat. And the move to raise stamp tax again - Gordon Brown had already raised it in his July Budget - caught many in the commercial sector napping.

"We had already had the previous increase, so there was a belief that the Budget would not tamper again with stamp duty," said Paul Griffiths, director of investment at commercial agency Chesterton.

Now Chesterton clients are rushing to complete deals. "Renegotiations are going on for many deals, because the new owners are loath to pay the extra money. So there is a lot of horse trading going on, and in most cases, parties are splitting the difference," Mr Griffiths said.

Informal guestimates suggest there might be as much as pounds 500m worth of transactions across the country that buyers and sellers will be trying to close before Tuesday evening.

Robert Kidby, a property lawyer at City solicitors Lovell White Durrant, is expecting very little sleep this weekend. "There are plenty of deals we are working on, where we hope to beat the deadline," he said.

One other problem highlighted by accountants and advisers over the increase is that it may range far more widely than the Budget lets on. Some accountants and lawyers are alarmed that the increase extends to the sale of all goods by the transfer of documents. If that is so, small businesses buying plant and machinery from other businesses by transfer of deeds also face paying higher stamp duty.

And there are concerns that for very large property transactions - say over pounds 10m - attempts will be made to do the deal off-shore, through trust companies.