The changes to Stamp Duty as outlined in the Chancellor’s Autumn Statement in December were an interesting move by the Government. Overall, easing taxation when buying a property at the lower end of the market is great news for First Time Buyers and undoubtedly helps to ease the burden when saving for a deposit. The changes were also great news for the mid-market – however the increases in Stamp Duty for those purchasing around the £1mill plus mark caused question marks as soon as the Autumn Statement was announced. In London and the South prices have risen to such an extent that some commentators are predicting that there could be a real ripple effect and the market at this level could well have already started to slow. But what is going on ‘on the ground’? We’ve asked two of our agents to comment.
Duncan Ley, Associate Director of Humberts in Truro says:
The reforms to the stamp duty tax have encouraged more sellers at the lower to mid end to bring their properties to the market – this has in turn had a consequential positive effect. Previously many home owners were ‘trapped’ in properties which had a genuine value just above one of the Stamp Duty thresholds but were unlikely to see a true market value offer as buyers would avoid paying a substantially higher stamp duty tax for the sake of a slightly higher offer. For instance anyone whose home was genuinely worth £265,000 might only have expected to receive offers of £250,000 as buyers would only be liable for a 1% tax rather than 3% should they pay a penny more than £250,000. Huge numbers of home owners can now realistically expect to sell their houses for a fair market value, thus encouraging them to bring their properties to the market. This increase in activity has led to a positive upswing in the lower to mid end market for 2015.
James Grillo Head of Country Houses at Humberts says:
The Autumn Statement’s changes to SDLT has undermined the need for a Mansion Tax.
The new system can be seen as a progressive tax as it ensures that the majority of residential property buyers in the UK pay less tax and the graduating escalating costs when compared to the ‘slab’ system of charging, seem fairer. On the whole the majority of buyers in the super prime market place have been able to cope with the additional tax burden.
Whilst any additional taxation is unwelcome, the social argument surrounding the new regime seems more equitable and therefore at the point of acquisition is deemed by most to be more acceptable when compared to an annual levy.
The new system has had a negative effect on the affordability of houses in the £1.8m to £2.2m bracket but is a marked improvement on the previous ‘slab’ system, smoothing out the step in value between £1.9m and £2.5m.