SECOND HOMES DEBATE – Part 2

I have had a number of people talk to me about my recent blog “When is a Second Home Classed as a Second Home?” and the majority of them tend to agree with my views.  The problem with the UK government’s proposal is that it is aimed at cooling an over-heating London market however,  the changes to Stamp Duty have already slightly curtailed that market and, as we know, the majority of investors who are buying in London have extremely deep pockets and are therefore not particularly concerned about the extra charge.  The Scottish government’s driver is slightly different but I still think it misses a great opportunity.

I personally think that all properties should exclude sole or main residence especially for the first five years. My proposal would be a change to the Capital Gains rules which would mean that if you sell a property, there should be a tax on the capital gain that is made between purchase and sale.   I also think that there should be a tax imposed on second homes that are empty for more than a certain period of time.   I know for instance in London a number of the investors simply buy properties, leave them empty for a number of years and then sell them on, benefitting from the increase in price and making a big capital gain.  There should be a higher tax on the capital gain and there should also be a penalty for empty properties.

I would urge John Swinney to re-think his initial proposals which I genuinely think could have a devastating impact on the Scottish housing market.

As an aside, my review of 2015 and predictions for 2016 will follow in early January and I take this opportunity to wish all readers of the property blog a Merry Christmas and prosperous 2016.

Lindsay Darroch
Partner – Head of Property
www.blackadders.co.uk

HOUSING ASSOCIATIONS – THE SOLUTION TO THE HOUSING CRISIS?

I was very interested to read Philip Aldrick’s column in The Times on Saturday 19 December.  As readers of this blog will know, I have been a strong advocate for both UK and Scottish governments using Housing Associations as the vehicle to deal with the nation’s housing crisis.  As I have previously highlighted the quirk in the system is how Housing Associations currently value their property – i.e. they value them at build value subject to depreciation rather than open-market value. This is highlighted in Philip’s column.

I would advocate, rather than the current UK government plan, that by simply changing the rules to enable Housing Associations to value their assets at open-market value and allowing them to borrow against this, it would free up a considerable sum which could be reinvested into building new properties to alleviate the housing shortage.  As readers will know, I am also an advocate of right to buy, as I do think that giving people the opportunity to move on to the housing ladder and for them to have a financial, as well as an emotional stake in the property, is very important.  I would not rush to re-introduce right to buy and certainly when it is re-introduced, say after five years, I would restrict the discount given.  However, it is interesting to see that this issue is now moving up in the agenda and I would strongly urge the Scottish government to investigate this and use the Housing Associations as the tinder to ignite the house building that is so urgently required.

Lindsay Darroch
Partner – Head of Property 
www.blackadders.co.uk

WHEN DOES A SECOND HOME BECOME A SECOND HOME?

I was very disappointed to see Scotland’s Finance Minister, John Swinney, announcing that there would be an additional supplement of 3% for people buying second homes.  I had hoped that he would not follow George Osborne’s ill-thought-out plans in relation to this extra charge.  As readers of previous blogs know, I am all in favour of some form of property tax or changes to Capital Gains Tax to help create a property fund that could be used to provide a safety net for people trying to get on the housing ladder in times of economic slowdown thus preventing an over-heating of the market. My view of John Swinney’s recent announcement is that it is a further statement of the Scottish government’s intent to destroy property ownership as an aspiration for the Scottish population.   I am also fearful that there will be some unintended consequences.  As always with these things, the devil is in the detail and at this stage we have very little detail.  Here are some of my questions/concerns:-

  1. When does a second home become a second home? I have recently acted for clients who, due to personal circumstances, used bridging finance to purchase their new property.  This means that for two to three months they can move at their leisure, getting their new house the way they want it before they have to leave their old house.   Would this be a second property?
  2. I frequently act for mums and dads who are keen to assist their children getting on the property ladder or perhaps wish their student son or daughter to live in their own accommodation. Will this class as a second home?
  3. What will the impact be on the buy-to-let investor who is looking to buy a £70,000 property and is suddenly having to find an extra £2,100 of LBTT? Given the requirement for a 30% deposit, my suspicion is that this will not cause a drop in the price, it will simply mean that there will be less purchasers which will mean less properties available, causing an increase in rents.
  4. Does this legislation apply to limited companies?

I would urge John Swinney to re-think and come up with a plan that enables him to control the housing market but in a way that supports the aspiration of property ownership.

Lindsay Darroch
Partner – Head of Property 
www.blackadders.co.uk

Blackadders Property Team Expands

LDD
Pictured left to right, sitting, Kirsty Wilson, Fraser Morrison and Lisa Martin, standing is Lindsay Darroch, Head of Property and Emma Gray, Head of Commercial Property

Blackadders are delighted to announce the appointments of three new solicitors to their expanding property team.

Kirsty Wilson and Lisa Martin have both joined the firm as senior solicitors in the residential conveyancing department. Kirsty qualified in 2010 and has previous experience in private client and civil court work but in recent years has moved her focus towards residential property matters.

Lisa also qualified in 2010 and has experience in civil court, private client and family law departments. However, since qualifying Lisa has specialised in all areas of residential property matters which adds further expertise to the residential conveyancing team.

Fraser Morrison joins the firm as a solicitor in the Commercial Property team. Fraser is experienced in all aspects of commercial property transactions, acting for a wide range of clients including large companies, private individuals and lenders.

Lindsay Darroch, head of property at Blackadders explained “Our appointment of these three highly rated solicitors demonstrates the growth of the property department at the firm and more importantly our commitment to delivering top-level advice to our clients”

The appointments come on the back of a busy and successful year for the Blackadders property team, where their performance has not gone unnoticed. The commercial property team, led by Emma Gray, has received a tier 2 ranking in the prestigious Legal 500 directory. Emma was also recognised as a recommended lawyer by the publication.

The commercial property team also entered the UK Chambers & Partners publication for the first time, with Emma Gray again being recognised as a ranked lawyer.

Lindsay Darroch continued “The property team has had a fantastic year. We are delighted to see the work of Emma Gray and her team recognised by the Legal 500 and UK Chambers & Partners – two highly credible directories – which shows the capability of the team. We look forward to building on this success in 2016.”

Lindsay Darroch
Partner – Head of Property
www.blackadders.co.uk