In a surprise announcement in the House of Commons last night theer is to be a U-Turn on Granny Flat SDLT.

When the government announced that there was to be a 3% surcharge for Stamp Duty Land Tax (SDLT) on the purchase of second residential homes in the UK, there was condemnation when it became apparent that the new tax would hit the purchase of homes with an annexe or Granny Flat.

The new plans were “morally wrong and economically illiterate” and it was claimed that will force grandparents to move away from families and be forced into care homes.

The increase in stamp duty was intended to hit buy-to-let investors and second home owners, but it soon became apparent that the rules were rigid and wide sweeping in that the small print revealed that many people would be innocently caught by them, and in particular families caring for elderly relatives.

It was the financial secretary to the Treasury, David Gauke who last night announced the surprising U-Turn in the House of Commons.  He said that the Government would drop the plans and table a fresh amendment to the Finance Bill 2016 which is currently going through parliamentary process.

We will have to await the amended clauses to understand the full effect of the changes but the stated intention is that annexes when purchased alongside a main residence in the same transaction will not be subject to the additional 3% SDLT charge levied on second homes.

The U-turn comes about after pressure was brought to bear by Sir Eric Pickles, the former Communities secretary.  Sir Eric had earlier written to The Chancellor, George Osborne raising concerns about the impact of the new legislation.

Unfortunately, this does not remove the problem that the higher SDLT charge will mean for many others who will be unfairly caught by the rules.  These include parents helping their children on to the property ladder with co-ownership.