Special Purpose Vehicles and self builds are the latest tax loopholes saving property buyers a fortune by paying less stamp duty.

SPVs are companies or trusts that are set up for the sole purpose of owning a specific property – often a commercial building like a factory, warehouse or retail premises but more frequently houses and flats since the recent stamp duty changes.

The SPV buys the property and then the SPV is sold to the purchaser.

The net effect is stamp duty is charged at 0.5% on the purchase of shares in an SPV rather than at the full rate of stamp duty.

One of the most expensive properties on the market in London is a five bedroom house in Knightsbridge with a tag of £6.95 million.

Putting them property in to an SPV could save the buyer about £240,000 in stamp duty.

Paying le3ss stamp duty with an SPV is not for every property buyer – the process does incur costs in setting up the company to hold the property that do not make the arrangement practical for cheaper property purchases, but then they attract a lower rate of stamp duty anyway.

Another  stamp duty work round that everyone can profit from is a self build.

Buying the land and building the property yourself means stamp duty is only paid on the purchase price of the land and not the final value of the home built on the land.

Providing this is less than £250,000 and you are a first time buyer, this is nil.

The taxman is reportedly eying these solutions to pay less stamp duty and the corresponding  loss of revenue, but as yet, no action is in place to close the loophole.

Campaigners for first time buyers are protesting about government proposals for stamp duty tax breaks on buy to let property.

PricedOut claim buy to let landlords already have too many tax incentives over other home owners and that giving even more will disadvantage first time buyers.

The government has announced plans to give portfolio and institutional property investors less stamp duty to pay by treating each purchase as a separate transaction rather than grouping them together to push the stamp duty liability in to a higher tax bracket.

PricedOut is a lobby group with 1,500 members formed in 2006 to speak out for first time buyers who can’t afford to raise a large cash deposit or pay high interest repayments on a mortgage. The group has a web site at www.pricedout.org.uk.

Astonishing housing market inequality,  claim lobbyists

Katy John, a PricedOut spokesman, said:  “The large tax breaks that buy to let currently enjoys mean that they can always out bid first time buyers. It is astonishing that the government is seeking to further entrench this inequality in the housing market”

“It is impossible to reconcile these proposals with government claims to be on the side of first time buyers and to be the party of progressive housing policies. It is time the government gave first time buyers a fair chance to compete – rather than kicking away all hope of joining the housing ladder.”

“The first time buyers who contact our campaign are desperate to get on the housing ladder, but all too often find themselves in direct competition for properties with buy to let landlords that they can’t compete with.”

PricedOut claims that Council for Mortgage Lender’s data shows tax and mortgage advantages mean that, on the same salary and for the same house, an average buy to let investor would have to pay the a seventh of their net income on the mortgage while a first time buyer would pay a third of their net income – even before rental income is considered.