Stamp reform could hit reassignable leases

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Reassignable leases could be hit by the government's proposed stamp duty reform, according to a leading property expert.David Coffer, chairman of...

Reassignable leases could be hit by the government's proposed stamp duty reform, according to a leading property expert.

David Coffer, chairman of Davis Coffer Lyons, said that any leases being reassigned to new operators will be liable for the new levy.

This could mean that licensees taking on existing leases could also face the costs from the government's new tax.

Chancellor Gordon Brown confirmed during his Budget statement on April 9 that he plans to implement stamp duty reform at the beginning of December through the new Finance Bill. All leases worth £150,000 or less are to be exempt under the new reform.

The proposal says licensees should pay according to the length of the lease rather than one year's average rent. This could result in the cost of a lease going up by tens of thousands of pounds, forcing many licensees out of business and discouraging many new licensees from buying into their first pub.

It could also have an effect on the major tenanted pub companies who would be forced to increase the price of their leases to cover the extra charge.

Writing for property magazine Estates Gazette, Mr Coffer said the impact would be "horrendous" for operators such as JD Wetherspoon which require a 35-year lease and have average rentals of around £150,000 per annum. He believes the stamp duty plans could add additional costs onto each of their acquisitions of £50,000.

"There are balance sheets with extensive portfolios of leasehold properties that now have a pregnant stamp duty liability of several million pounds for which there was never a need to provide previously."

"The leisure sector will be paying for the sins of the property speculators and investors," he argued.

Related topics Property law

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