Stamp duty change welcomed as 'step in the right direction'

The government has taken the first step towards freeing the sector from the burden of stamp duty payments on unstamped tenancies.

In the Budget on Wednesday, chancellor Gordon Brown revealed that the Inland Revenue would remove the obligation for registered social landlords to pay stamp duty on tenancies for housing homeless people.

This will apply retrospectively to tenancy agreements made after 1 January 2000.

The National Housing Federation and Local Government Association have been conducting a wider lobbying campaign over the issue of stamp duty for all tenants, as the situation applies to all tenancies (HT 30 January, page 8). They hope this concession on tenancies for homeless people will strengthen their hand.

The problem facing registered social landlords and councils relates to a law on the payment of stamp duty which means housing providers are required to pay backdated stamp duty before processing tenancies.

Much duty remains unpaid as the law that required it had been largely forgotten and so bills can run to thousands of pounds.

National Housing Federation policy officer Bob Wilson said: "[Brown's announcement] is a considerable success but we'd have liked the Treasury to have gone further and tackle the wider issue as this still poses a major headache for our members."

This is a considerable success but we’d have liked the Treasury to have tackled the wider issue as it is still a major headache for RSLs

Bob Wilson, NHF policy officer

Wilson said unpaid stamp duty on tenancies taken out before March 2000 affected a vast number of social housing providers.

The NHF says this costs the sector £2m a year, with the legal costs of the challenge at 2% of this, or £40,000.

New Charter Housing Association is bringing a legal challenge on broader stamp duty issues and it is likely Brown's decision will considerably strengthen the case.

Trowers &David Golten, solicitor at Trowers & Hamlins who is bringing the case on behalf of New Charter, said: "This is a step in the right direction, but by no means the comprehensive exemption we were looking for.

"The homelessness issue was politically the most awkward, which is why the government has done this now."