(2) whether stamp duty will be levied on tenants taking out a 10 per cent. equity share under the proposals for reform of the Social Homebuy scheme;
(3) whether (a) the social tenant and (b) the social landlord is liable to pay stamp duty under the Social Homebuy scheme.
Stamp duty is paid by the purchaser of an interest in land. Purchasers of a share in a property under Social Homebuy are liable to pay stamp duty on the same basis as other shared ownership purchasers. This means that they can, if they wish, elect to pay stamp duty once and for all on the market value of the property, less Social Homebuy discount. Otherwise, they will pay stamp duty on the amount they pay for the initial share of the property. In this case, purchases of further shares up to 80 per cent. are exempt but they will have to pay stamp duty on the purchase of a final share, including the freehold reversion.
Outright purchases under Social Homebuy attract stamp duty on the same basis as a Right to Buy/Right to Acquire purchase: that is, on the price paid for the property, less Social Homebuy discount.
The average stamp duty land tax paid on right to buy transactions in 2005-06 was estimated at £200. The average includes transactions which paid no stamp duty land tax either because the price of the property was below the stamp duty land tax threshold, or because of disadvantaged area relief.
As reported in the Financial Statement and Budget report published on 21 March, the annual cost of the stamp duty exemption is projected to be negligible (defined as less than £3 million) in each year of the fiscal years 2007-08 to 2009-10 and to rise to £15 million in 2011-12.