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RPs must make sure they’re aware of this hidden cost of developing new homes for sale or open market rent before it eats into their profits, writes Croftons’ Property Partner Julie Loggenberg.
Historically, housing associations haven’t been overly concerned about Stamp Duty Land Tax (or SDLT as it is commonly referred to), because when undertaking their charitable activities, or upon utilising social housing grant or buying local authority land, they were able to rely on reliefs that meant they did not pay SDLT on land acquisitions.
However, now that housing providers are being forced to increase revenues and capital receipts to fund their primary purpose by undertaking increasing volumes of non-charitable activities such as PRS or outright sales via non-charitable development companies, then SDLT starts to loom large on the horizon and cannot be ignored.
SDLT could significantly increase development costs and eat into those vital profits, so being aware of the exemptions and reliefs available when structuring land acquisitions is essential.
Speaking to your accountants and legal advisors promptly will save you time and money, particularly when land is in short supply and speed is of the essence to beat the big developers to the deal. So don’t leave it until the contracts land to address the issue.
Also, if RPs are buying sites for pure outright sale, then you will be liable to S106 Agreements just like any other commercial developer where Community Infrastructure Levy contributions or large commuted sums will be levied.
Here at Croftons we are happy to look at Heads of Terms or provide pre-acquisition advice to RPs when embarking on these types of projects.
Croftons is the trading name of Croftons Solicitors LLP, a limited liability partnership registered in England and Wales with number OC343375. The term ‘partner’, if used, denotes a member of Croftons Solicitors LLP or a senior solicitor of Croftons Solicitors LLP with equivalent standing and qualifications. A full list of members is open to inspection at the office. Croftons is authorised and regulated by The Solicitors Regulation Authority (SRA) number 508041. Croftons has its principal place of business at The Lexicon, Mount Street, Manchester, M2 5FA.