Since the stamp duty holiday began last July, most homebuyers in England and Northern Ireland have not been taxed on the first £500,000 of any home purchase – although the 3% surcharge for landlords and other second-home buyers still applied throughout. In April 2021, a 2% charge for non-UK residents was applied.
Despite the calls from MP’s to make this holiday permanent, the government has confirmed a return to the original rate by 30th September.
The stamp duty holiday was designed to give the housing market a boost during the Covid-19 pandemic, and it has done just that with UK house prices this month showing the largest increase since 2015.
Tim Bannister, Rightmove’s director of property data, said:
‘’Since the market re-opened last May in England we have seen huge jumps in the numbers of sales being agreed, but these are now rising at a slower pace. Record low-interest rates and stamp duty tax reliefs have helped many to afford higher prices, satisfying their pent-up desires for a new home fit for a new era.
Some of that demand has now been met, and the phasing out of stamp duty reliefs has also taken away some of the urgency to move, though our high traffic and search data indicate that there is still strong buyer demand.”
The staggered reintroduction of the stamp duty means that properties up to £250,000 will still be Stamp Duty-free until October, enough to purchase rental properties in many of Britain’s highest-yielding areas.
With the tax break about to come to an end, there is a concern that anti-money laundering checks may be rushed in desperation to take advantage of the stamp duty tax relief on properties of up to £500,000 in England and Wales.
Martin Cheek, managing director at West Yorkshire-based tech firm SmartSearch, said:
‘’In a busy market as we have today, which is driven by the rush to beat the stamp duty holiday, it’s a sad fact that criminals and their enabling agents will look to exploit the opportunity.
Property transactions remain the number one target for money laundering and with the volume currently going through the system, there is a danger that some AML checks and procedures may be rushed through.
But in a way, the bigger danger is from agents and legal firms still using manual methods of verification for anti-money laundering processes. Document forgery is a major industry with highly sophisticated products available on the black market.
It is almost impossible for even the most experienced broker or agent to tell the difference. If they’re under time pressure, or just seeing a passport image copied into an email, there is a real danger criminal applications will get through unchecked.”
He added that there have been increasing levels of fraud and money laundering attempts since the outbreak of coronavirus, as criminals can easily bypass manual security checks.
Martin Cheek also said regulated businesses operating in the property market should be looking to switch to electronic verification.
‘’Financial services firms who are unwittingly processing applications from criminals will be held responsible by the FCA so it’s clearly in their interest to do everything they can to prevent them even getting through.
The most effective way of doing that is by switching to electronic verification for Know Your Customer (KYC) procedures. With the technology available today it takes two seconds to carry out an individual search, across multiple global databases, with just a name, address, and date of birth.
Manually checking hard copy documents is no longer necessary, or secure. The switch to digital is long overdue for many businesses who would not only save themselves time and money but ensure criminals are kept out of the system.”
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