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‘Chancellor must tread carefully with stamp duty reform’

The Chancellor said in a recent interview that stamp duty avoidance was "something we are definitely looking very closely at now".

The BPF can see the case for introducing targeted measures to ensure purchasers of high value residential property pay their fair share of SDLT, but it warned that any such changes should not be applied indiscriminately across UK property markets.

The dynamics and economics of the commercial property market are very different from the high end residential market, and the impact of a general clampdown could be disastrous, especially in regional commercial property markets.

Peter Cosmetatos, director of finance at the British Property Federation, said: "It’s vital that the Government correctly identifies the target of any new measures aimed at stopping stamp duty avoidance by super-rich foreign buyers of high-end homes in the UK, and design them carefully to avoid collateral damage.

"Unlike high value housing, the commercial investment market is fragile, with weak confidence and limited liquidity outside central London, and the use of holding structures is widespread for a variety of commercial reasons, especially where there is, or may be, co-investment by a number of different parties.  Any changes to the stamp duty treatment of property holding structures affecting the commercial investment market should only be made after thorough consultation with the industry, because they could have a dramatic impact on transaction activity, investment volumes and, ultimately, asset values.

"In its enthusiasm to clamp down on avoidance elsewhere, the Government must not forget the importance to the UK economy of rebuilding confidence and liquidity in the commercial property investment and development market."

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