Stamp duty or stealth tax? Steep new land registration fees due to come into force in September

Following approval by Tynwald on 21st May 2019, the “Land Registration General Fees and Duty Order 2019” and the “Deeds and Probate Registries (Fees and Duty) Order 2019” are set to come into force on 1st September 2019.

Minster for the Treasury, Alf Cannan has said

“This is a move to an alternative fee structure where the burden sits more equitably on those with higher value properties” and “to help those on low to middle incomes and more proportionately address those on higher incomes. Neither individually nor collectively do these represent an increase to land registry fees.

“This is absolutely not a stamp duty or a stealth tax!”

This will come as a big blow to those looking to purchase a higher value or second property and it is expected that there will be an immediate urgency for anyone purchasing such a property to achieve completion on the transaction and registration with the Land Registry before 1st September 2019 to prevent a significant increase in the duty payable to the Government.

This will provide some welcome relief for those purchasing lower value properties.

There are however certain requirements in place that in order to gain any benefit, the property you are buying must be your sole property and must be used for residential purposes only. If this criteria is not met, the result will be a significant increase in the duty payable.

The Economic Affairs Division of the Cabinet Office confirm that in 2018 the average property transaction stood at a value of £271,411 with 1,174 residential property transactions recorded.

Based on the new tariff, for example, the duty payable on a property sale for an owner-occupier (subject to this being their only property) for a value of £271,411 after 1st September 2019 would be £820, a 47% saving from the pre 1st September 2019 rate of £1,550.40

However, a property sale for the purchaser of a second property for a value of £1,000,000 if registered after 1st September 2019 would attract duty payable of £15,000, a 163% increase from the pre 1st September 2019 rate of £5,700.

Subject to the conditions of the purchase being your only residential home, any purchase of over £440,000 will leave the buyer paying higher duty!

In normal circumstances, Quinn Legal advise that an average conveyancing transaction takes between 6 – 8 weeks, subject to any specific complexities and with less than 3 months until the implementation of the Orders time is of the essence for those wishing to purchase a new property!

Quinn Legal have put together an online calculator to assist however if you have any specific queries please do not hesitate to contact our property team where we will be delighted to assist.

Access the calculator here.