Most agree that some kind of stamp duty reform needed to happen, and the consensus is generally – although definitely not exclusively – positive. So will buyers “eventually take [new charges] on the chin” – as buying agent Edward Heaton thinks – or is 12% a “punitive measure [that] will directly affect capital value and cannot be absorbed by the market” – as Aston Chase’s Mark Pollack believes?
Here’s what the prime resi industry thinks of Chancellor George’s Autumn Statement, which included the abolition of SDLT’s slab structure.
Stamp Duty reform is long overdue
Jennet Siebrits, Head of Residential Research, CBRE UK
“We welcome this reform of Stamp Duty as it is long overdue. We are pleased that reform has been reviewed across the board, making it fairer and proportional and taking it away from the current ‘slab-system’ that is used today.
“It is also disappointing that the Government has done little to address the massive shortfall in new-build housing other than through one small extension to an Oxfordshire town. Until the supply of new homes is properly addressed we will do little to solve the fundamental housing problems Britain has.”
A long overdue reform
Jeremy Blackburn, Head of Policy, RICS
“Finally we see long overdue reform to the stamp duty tax system – described by the Chancellor as the most damaging tax of all. Time and time again RICS has called for these changes to stamp duty structure, which now mean 98% of house buyers will benefit.
“These changes reduce distortion and ensure those at the top end of the market contribute fairly, while those at the bottom will be given a fairer chance to get on the ladder, cutting out ‘dead zones’ in the market.”
SDLT reform will penalise the London market and also hit the country house market
Nick Leeming, Chairman, Jackson-Stops & Staff
“This has emerged as the Osborne & Little Autumn Statement – with little incentive for property buyers at the mid to high-end of the market. It is a tax on mansion buyers. This rate of 12% on properties above £5 million will penalise the London market and also hit the country house market, which is still struggling to recover from the recession. However, we welcome the changes on stamp duty at the first-time buyer end of the market as this will help to stimulate activity at that level.”
Buyers at the top end will eventually take it on the chin
Edward Heaton, Heaton and Partners
“This is a dramatic increase and it is likely to further stifle what has already been a subdued market at the very top end this year. However, I expect it to be shortlived the reality is that buyers at the top end tend to come to terms with the costs involved in buying and they will ultimately take it on the chin. Unwelcome as this news might be to those of us in the industry, I don’t think this will make London and the UK any less attractive to international buyers whilst wealthy British buyers will also come to terms with it.
“There is certainly some evidence to suggest that houses priced between £2m and £2.5m are not selling as readily as those priced either side of that band. There seems to be three schools of thought when negotiating mansion tax; those who price at £2m to keep the it below the threshold, those who try and those who put clear water between the two so price high at say £2.5m and also there are quite a few sellers who quote £2.1 or £2.2m to give themselves some negotiation room with the expectation of achieving £2m. I have noticed over the last year a significant number of our clients with budgets of up to £2.5 million are even more are expressly looking to buy under £2m with many then planning significant improvements to a house which will hopefully go unnoticed when it comes to any revaluation. This applies just as much in the country as in London, indeed arguably more so. We have noticed a sea change in demand from investment buyers many of whom now seek sub £2 million houses or flats to avoid the potential risk of a mansion tax.”
A long-overdue overhaul
Lawrence Hall, Zoopla
“The new, graduated Stamp Duty system is a long overdue overhaul to what the Chancellor admitted was a poorly-designed tax and represents a fairer system for the vast majority of homebuyers. It also means that those selling their home at certain levels are more likely to achieve the real value of their homes and won’t be forced to discount their properties to sneak under certain bands. Unfortunately those buying property worth more than £937,000 may feel unduly penalised by the new reforms, but the new structure represents a more balanced system overall and a welcome alternative to the ‘mansion tax’ plans that had been proposed.”
Any additional strain on the top tiers of the market will be absorbed, and the natural rhythm of the property market won’t be disrupted
Peter Rollings, CEO, Marsh & Parsons
“This Stamp Duty shake-up is long overdue, and the abolition of the archaic slab system will take the sting out of the tail for thousands of buyers on the lower rungs of the ladder. The new graduated system should help brighten the UK housing recovery in regions outside of London, where property prices are still battling back to pre-recession levels – but it will add to the weight of the tax burden shouldered by those buying more expensive homes. In Prime parts of London, where 56% of property is worth £1million or more, this will impact a significant proportion of ordinary working families.”
“But any additional strain on the top tiers of the housing market will be absorbed, and the natural rhythm of the property market won’t be disrupted. Buyers investing in Prime London property are accustomed to having to pay a higher price than elsewhere across the country, but the unparalleled returns and capital growth on offer more than make it worthwhile, so demand won’t be quashed. London property taxes have historically been cheaper compared to other world cities, so this overhaul brings it into line with rival global centres of investment and although, one-off purchase costs are always a bitter pill to swallow, it won’t deter people from snapping up their dream home in a desirable location. Buyers will soon adjust and it will simply become the norm.”
An extraordinary hike that will impact immediately
Ed Corry Reid, Associate Director, Aylesford International
“To say we’re all surprised is an understatement. I’m questioning how much of this is political in so far as are the Conservatives trying to shoot Labour and the Lib Dem’s Mansion Tax fox? Regardless of why, the fact is that the new 10% and 12% levels represent an extraordinary hike in tax that will impact immediately on levels of activity in London and the South East. With the new rates coming into effect from midnight, we have already seen serious jitters on ongoing transactions over £1m. This coupled with the election next year could easily see the London market stagnate until next autumn at least. It seems incredibly short sighted to place such a large burden on a market in central London, which is already under a huge amount of pressure, and which already contributes a significant amount to the treasury in SDLT.”
Sensible; the cost of owning a high-end property in London remains significantly less than in a number of other major cities
Penny Mosgrove, Managing Director, Quintessentially Estates
“The changes to Stamp Duty are sensible as they will reduce the significant impact that the current thresholds have on property valuations, as well as making buying a home more affordable for the majority of purchasers. The reforms will increase the tax paid on properties around the £1m mark and above, the highest concentration of which are found in central London. Nevertheless, the cost of owning a high-end property in London remains significantly less than in a number of other major cities including New York, Geneva, Paris and Dubai, all of which compete with London for investment at the top end of the market. We therefore don’t expect the higher tax burden to have a significant effect on sales of higher value properties.”
A disaster for prime property sales
Alex Newall, Managing Director, Hanover Private Office
“12% Stamp duty on residential properties priced over £1.5m is a disaster for prime properties sales, but a great help to the mass market. The new stamp duty helps 98% of the market and threatens high end sales volumes. So there is no Mansion Tax, but this new stamp duty could harm prime market.
“Already we know that buyers are now rushing to exchange contracts before midnight tonight meaning lawyers are now flat out. Buyers chip pre-agreed prices and rush to exchange contract to save £££ by midnight tonight.
“Uncertainty removed from property market, as new stamp duty introduced. Tory’s are hitting the rich looking to buy a house. Agents welcome scrapping of Mansion Tax, but we are concerned about new Stamp Duty and shares in luxury property consultants should fall, following this increase in the stamp duty on luxury homes. My view is that high value areas will be re-priced to take new stamp duty into account and the PCL residential market will stall until market is re-priced. Hanover’s first client has re-priced his home to sell with 5% off the price, to take into account of new stamp duty land tax.”
“The announcement to Reform stamp duty has been made, and hopefully this will replace any need for a Mansion Tax, which has been widely criticised as grossly unfair. The total Stamp Duty Land Tax (SDLT) yield from sales of residential properties in 2013/14 was £6.45 billion, marking a 31% increase on a total of £4.9 billion in 2012/13, recent HM Revenue and Customs (HMRC) data has shown.
“Negating the need for a possible Mansion Tax for owning rather than buying is welcome news and will help all those families who have by no fault of their own, have ended up owning houses which have risen in value and gone above £2m. In London, this may only be a two bedroom flat, where house prices have risen over 20% in the last year.
“This is fantastic news for first time buyers who will pay no stamp duty up to £125,000. The slab system has been abolished, and like income tax, the new system will tax on the part of the price within the new bands. This will help fuel the lower end of the market and we expect the volume of transactions to grow.
“However the new banding will have a significant impact on the prime market (those properties priced over £1.5m where stamp duty will be a whopping 12%, and will make buyers think twice before writing a HMRC a very large cheque. On a £5 million residential property, the buyer will have to write a cheque for £514,000 to HMRC, rather than £350,000. Nowhere will this hit harder than in Prime Central London and the South East, where the majority of super prime transactions occur. The volume of sales are already down and Notting Hill has seen a decline of 48% in transaction volumes over the last 12 months following the fears of Mansion Tax as people worry about the annual costs. Increasing stamp duty will make it more expensive to buy a house at the top of the market, but the wide majority of existing owners will favour this approach. Compare taxes in Londonto those in New York City, and London will still remain a global draw. Security, education, business, a completely multi cultural society, and despite operating a tighter tax system, it is in fact one which is now more in line with other global cities, such as Hong Kong where stamp duty is as high as 8.5% and in Singapore where it reaches 15% for foreign buyers or 10% for Singapore buyers acquiring a second home.”
A stroke of genius
Edo Mapelli Mozzi, Managing Director, Banda Property
“George Osborne’s announcement on Stamp Duty Land Tax reforms is a stroke of genius. Osborne has reduced distortions in the housing market by abolishing slab structure, and I really hope this means that the door is finally closed on a mansion tax coming in. We welcome this move because previously the rules were outdated and it had fundamental flaws. Osborne is clearly appealing to win votes from the majority 98% of homeowners and that’s a clever move. It gives him an opportunity to validate his ‘bashing of the rich’ when he needs to appeal to the electorate as the election campaign unfolds, as he’s only taxing those that can ultimately afford it. However, this will unquestionably impact the £2m+ London market and I very much hope, therefore, that this is the last we ever hear of mansion tax.”
Changes will simply be priced into the what buyers are prepared to pay and renegotiations will now be rife
Camilla Dell, Managing Partner, Black Brick
“There is no question that the old stamp duty bands were in desperate need of reform and overhaul. For 98% of the UK population these changes are therefore clearly good news. But there is equally no doubt that these measures will hit property values in London and the South East and significantly slow the market. Deals that have yet to complete but have been agreed will now need to be renegotiated to reflect the change in SDLT and it is inevitable that a number of these will now fail to complete.
“At the very top end of the prime market above £10m the impact is likely to be particularly acute. For every £1m above the old £2m top SDLT rate threshold, buyers will now be paying an additional £50,000 in stamp duty compared to before. For the buyer of a £20m London home, this equates to an additional £1m in duties than was the case on 2nd December. While we accept that stamp duty is a one-off purchase tax that the majority of high-end property buyers can comfortably afford to pay, these latest changes are likely to have a pronounced impact on market conditions in the coming months.
“The trend of investors focusing on lower priced property will continue. We predict that the sub £1m market will rally as a result of the new changes and we will see over demand and under supply. There will be an immediate impact on deals already agreed but which have not yet exchanged. In particular, chains may well fall to pieces if the increased SDLT means that purchasers can no longer afford the property they are buying. Given the time of year, many buyers may now wait until the New Year for the market to settle. We also predict that there will be a complete shift in the pricing structure of the market especially at £2m; we will now see estate agents marketing properties at £2,050,000 for example, whereas previously there was a pricing void between £2m and £2.2m due to the increase from 5% to 7% SDLT at £2m.
“The new changes do send out concern, particularly for overseas buyers who have seen huge changes over the last 2 years – (new SDLT level at £1m and £2m, 15% SDLT on purchases by non-natural persons, ATED, CGT on foreign residents, and now another change to SDLT). One of the reasons why London attracts so much investment is due to the stability of the market. This constant political intervention must have the effect of breeding some uncertainty. However we have been here before, and the market has not suffered. Will it just be a bump in the road or something more serious? Only time will tell, but our view is that the new changes will simply be priced into the what buyers are now prepared to pay for a property and renegotiations will now be rife. So, a buyer purchasing a property for £5 million will want to drop their offer by £163,750 to take into account the increased SDLT. On the positive side, we have several deals under offer sub £1m and those clients will be saving money as a result of the changes.”
Another nail in London’s bursting residential housing market
Elizabeth Small, Partner, Forsters LLP
“While the Chancellor’s abolition of Stamp Duty Land Tax in its current form may take many by surprise, it actually moves us more closely in line with the Scottish Land Tax system. In addition, this move hits the government’s objective of removing those at the lower end of the housing market from the burden of taxation, while increasing the burden for the top end proving that ‘we are all in it together’.
“For London, this is likely to prove another nail in the bursting residential housing market and may cause some purchasers to put the brakes on. A possible solution for many will be to move residential property into a company ownership, as the now greatly reduced increase of three per cent in land tax for some corporate purchases will not look so dramatic next to threat of 40 per cent inheritance tax.”
The new Stamp Duty bands will have severe effect on the middle market in London
Peter Mackie, Senior Partner, Property Vision
“The Government is right, the new Stamp Duty rules will help 98% of people trying to get onto the property ladder but the impact of the changes will be greater at the lower end of the market where buyers rely on borrowed money, rather than the higher end where if a buyer can afford to pay cash for a £50m house they can afford the Stamp Duty.
“The increases in Stamp Duty over £1.5m will mean that buyers will need to find additional cash to fund the transactional costs which you cannot borrow.
“The remaining 2% isn’t just made up of overseas buyers increasing their property portfolios in Prime Central London. The new Stamp Duty bands will have severe effect on the middle market in London, particularly for families looking to buy a relatively modest family home between £1m- 2m in areas like Wandsworth, Battersea and Clapham.
“Buyers will have to stump up as much as £100,000 in Stamp Duty for an ordinary Victorian semi-detached home which will force growing families to either, look at ways to extend their current home or move further out of London to find greater value.”
A surprising and decisive move
Stephanie McMahon, Head of Research, Strutt & Parker
“This is a surprising, and decisive move from the Government. If it means that there is no longer any need for a mansion tax, and it almost seems to make the case for it obsolete, then it also seems to be a largely positive move. It effectively replaces the need for an annual levy on properties above £2m.
“It was almost universally recognised that our Stamp Duty system was out of date and in desperate need of modernisation. The old thresholds were acting like invisible barriers and making the market very sticky in places.
“Clearly those buying homes over the c£1.1 million mark will pay more tax tomorrow than they will today. However, overall this new system will benefit the vast majority of the UK’s homebuyers.
“In the short term, current ongoing transactions will also be impacted. When any new tax is enforced this inevitably causes disruption.
“However, keeping the status quo was an unlikely outcome. Making this change immediate from midnight tonight was sensible as it leaves no room for speculation and will not cause any further uncertainty which has been so damaging to our housing market around taxation changes in recent years. In the long term this new system shouldn’t cause significant market disruption over an extended period of time.”
The Conservative Mansion Tax: This will not be welcomed by the upper end of the market
Martin Bikhit, Managing Director, Kay & Co
“Today’s announcement essentially introduces the ‘Conservative Mansion Tax’ – a tax on purchasers of homes at £1.5m rather than £2m! This will not be welcomed by the upper end of the market where the increase in tax means the taxation burden is potentially enormous, for example we have one transaction where the stamp duty payable will increase from £581,000 to just under £910,000. However, if ever there was a time to introduce such a tax change, it could be now, as the current market is in a natural lull, therefore potentially giving buyers time to adjust, and impacting less than it might have done if we were in a very buoyant market.
“That said, the constant frustration that remains is the spur of the moment manner in which these taxation changes are introduced by successive governments. The ‘midnight deadline’ of today by which to exchange contracts on a property, or potentially face substantially higher stamp duty levies, causes enormous issues to so many innocent people engaged in the process of buying a property. It is not just the rich that will be affected by today’s announcement, it is the less well-off much further down the property chain, including first time buyers, who will find their attempt to purchase a home unravel before their eyes.”
A complete own goal: This punitive measure will directly affect capital value and cannot be absorbed by the market
Mark Pollack, Director, Aston Chase
“This announcement has taken the London property fraternity by complete surprise, particularly given timescale of midnight when the higher levels of stamp duty will take effect and the distinctly unseasonal gesture by the Chancellor. It’s inevitable that this will cause many deals to fall through and for aggressive and desperate re-negotiations to be happening from this moment on. The reality is that while talk of a Mansion Tax was fraught with implications for the government, this unexpected turn can only be viewed with grave concern by those who understand that the existing prime residential market in London is already under pressure and far from buoyant.
“A five per cent hike in reality is certain to force a total reappraisal in the value of stock. Previously a 1-2% increase might cause a knee jerk reaction, that would be swallowed in the ensuing months, but this 5% extreme increase will expose the reality that there is not the excess of money sloshing around among domestic buyers, in reality it is the wealthy international investors who are in a position to absorb such extreme increases. London’s own residents and domestic buyers often have no choice but to remain in the capital and their lifestyle and work commitments tend to demand that their properties are geared to support and enable this. This punitive measure will directly affect capital value and cannot be absorbed by the market. The only winners in this scenario will be the basement specialists and loft conversion companies, who will be inundated with enquiries from homeowners forced to stay put and improve rather than move.
“This action by the government appears a high impact quick fix and a complete own goal. In an effort to raise more tax from London to allow for a discount on lower value housing, in the next six months it will undoubtedly cause a further slowdown in the market’s activity and coupled with the election, it really is a blow that looks likely to be felt for some time.”
Fantastic news for the majority of buyers
Peter Allen, Sales & Marketing Director, Londonewcastle
“The Chancellor’s announcement on SDLT is fantastic news for the majority of buyers in the UK, and a lot in London too, with a £3,000 saving on a nice two-bed new build in Zone 2 priced at £700,000. This, with the news of the UK economy’s strong growth figures, low inflation and low interest rates, underlines the continued attractiveness of investing in property in the capital. I’m looking forward now to the market waking up to these basic underlying facts in the New Year.”
A much fairer system, although there will be a flurry of high-end exchanges today to beat the changes
Mark Harris, Chief Executive, SPF Private Clients
“The long overdue reform of the antiquated slab system of stamp duty will result in a much fairer regime. The reforms will negate any scheme abuse where people buy just under a threshold to avoid a big jump in duty.
“It will make it easier for first-time buyers and struggling families to get onto the ladder or move up it as they will need to set less money aside for stamp duty and can put more towards their deposit.
“Anyone buying a property for more than £937,000 will pay more stamp duty under the new bandings, with the increases becoming more dramatic the greater the value of the property. The result will be a much fairer system, although there will be a flurry of high-end exchanges today to beat the changes.
“While the changes will hit wealthier buyers in the pocket, they have to be fairer than a mansion tax as it’s only a hit that is taken once. It will fundamentally change the way we view our homes: people will think much harder about moving as they are likely to stay put for a number of years. Big moves will be the order of the day rather than several staged moves, particularly for more expensive properties.”
Not great news for the top end, but it does make a mansion tax less likely
Hugo Thistlethwayte, Managing Director, Prime Purchase
“The stamp duty changes are good news for first-time buyers and should free up the middle market as it removes barriers around the thresholds.
“It is not great news for the top end, however, as it will hit buyers hard but on the upside it does make the introduction of a mansion tax far less likely.”
Should neutralise the threat of a mansion tax
Charles McDowell, Charles McDowell Property
“Abolishing the antiquated slab system of imposing stamp duty and replacing it with a tiered system will help those buying at the lower end of the spectrum, but establishing a new 12% tax on properties over £1.5m may discourage those seeking to upsize and may encourage inappropriate renovation of properties valued below that threshold.
“At the same time, this new system, which can be easily implemented without having to revalue properties, should neutralise those seeking an unworkable mansion tax.”
A much fairer way of charging, but it will disproportionately affect the market in the Capital
Lisa Mackenzie, Regional Sales Director, Kinleigh Folkard & Hayward
“The changes just announced to Stamp Duty Land Tax appear to be a much fairer way of charging. The new tiered system will be good news for many buyers within the London market looking up to £1,000,000 . Taking away the smaller increments and making one large band between £250,000 and £925,000 will eliminate the stigma previously associated with certain price bands, especially those around £500,000. However the changes do penalise buyers looking in excess of £1,000,000 which will disproportionately affect the market in the Capital. We’re currently experiencing a flurry of interest from buyers keen to understand what the new rules will mean for them and in the majority, many appear to be slightly better off.”
Long overdue, but tonight’s too soon
Jonathan Harris, Director, Anderson Harris
“Reforming the unfair slab Stamp Duty system is long overdue. However, doing it practically immediately is not fair as it will hit some people hard who are part way through a transaction but not able to exchange by midnight.
“We would have liked to see an amnesty for those who have made a decision to buy based on current legislation. What does it mean for people who don’t have the extra cash they are now required to pay.
“We have clients nearing exchange who won’t be able to achieve it before the deadline. Given a week or two amnesty, things would have been different.”
Removing slabs will remove market distortions
Liam Bailey, Global Head of Research, Knight Frank
“Removing the slab structure of the current form of stamp duty will remove distortions in the market. There will be less bunching of values below the different thresholds. However, the new higher rates of stamp duty at the top of the market could act to reduce transaction volumes here and actually lower overall tax take more than currently forecast. Over the last year alone transactions of £1m+ homes have accounted for nearly 30% of all Stamp Duty revenue.”
New rates will disproportionately affect the London market
Tom Bill, Head of London Residential Research, Knight Frank
“London already contributes 42% of stamp duty revenue in England and Wales and properties valued at more than £1 million in the capital account for 21% of the overall tax take. The new rates are likely to increase this contribution and disproportionately affect housing market activity in a city that is making a significant contribution to the country’s economic recovery.”
Likely to dent London’s global buyer appeal in the short term
Faisal Durrani, International research & business development manager, Cluttons
“Yet again the Chancellor has delivered a Budget Statement that gives with one hand and takes with the other. Clearly the lower end domestic market stands to benefit from the new banding system for Stamp Duty, but prime Central London buyers are likely to end up slightly worse off.
“On the international front, overseas buyers and investors have now only got to make provisions for the same Capital Gains Tax rates as UK purchasers (as at April 2015), but the new Stamp Duty thresholds in London, plus the 50% rise in ATED rates means that the Government has now created a three pronged tax attack on the main driver of the upper echelons of the market.
“The overseas buyers, which are a crucial component of the London market, appear to have been ignored, but the tax changes are likely to dent London’s global buyer appeal in the short term.
“Against a backdrop of an increasingly stable residential market in the capital and a softening global outlook, the constant evolution in the tax regime does nothing to boost the appeal of London. On the contrary, when surveyed, our HNWI client base has often expressed frustration at the ever changing tax regime. And while some HNWI have been eager to make the necessary payments and move on, the succession of Budget Statements that have targeted overseas buyers will not be well received by the international community.”
London’s global investment appeal is unlikely to wane in the long run
Sue Foxley, Research Director, Cluttons
“With growing concerns on the affordability of the UK housing market for domestic buyers, the Government has responded by scrapping the historic Stamp Duty tax system and replacing it with a new tax band regime similar to income tax bands. The system will be welcomed by buyers who have been unable to step on or up the property ladder due to current slab rates, which are often considered unfair to both buyers and vendors as prices around thresholds have always been artificially influenced as a result of the rigid banding.
“The new bandings at the top end (paying 12% on the part of the property priced over £1.5m) is clearly aimed at the overseas cohort and will likely put to bed the recent political ramblings on Mansion Tax. Prime Central London will be most significantly impacted by this, however we will have to see whether this will have any effect as the upper end of the market is largely dominated by international buyers and London’s global investment appeal is unlikely to wane in the long run.
“While all the changes at the top end of the market may be financially and morally justified, the uncertainty over tax treatment tends to stupefy the market. Without movement at the upper end, there is a knock on impact further down the line resulting in the low transaction levels we are now seeing the London market.
“London’s appeal as a home for investment reflects its qualities as a global city. However, in order to maintain that status we need to ensure it offers a quality of life that appeals to domestic and global skilled workers for which corporates compete. Unfortunately if it cannot deliver on quality of life expectations, London will be displaced by other global cities.
“The announcements on a new garden city with 13,000 homes and improved infrastructure will be welcomed by first time buyers priced out of more urban areas and will particularly help squeezed families. However there is also a strong financial argument to increase and accelerate spending on transport infrastructure in existing urban areas rather than create new cities, as attractive as they might sound. Opening up of, admittedly less attractive sounding, brownfield land, makes residential development at a range of densities, viable and deliverable.”
I don’t doubt that the capital will be the poorer for it
Ed Mead, Executive Director, Douglas & Gordon
“It was certainly time to overhaul the stamp duty slab structure, but with the average London property priced at £500,000, stamp duty would amount to £15,000 regardless of the reforms, making buyers in the capital essentially cash neutral. But from £500k to £937k it’s actually cheaper than the old system, so it’s not only first time buyers who’ll benefit.
“In the past, the Chancellor has sought to deter people owning as enveloped company structure dwellings, but these changes would seem to become a good idea for high value properties. This seems counter intuitive.
“In some cases, it might also deter wealthy purchasers to buy in London at all, and I don’t doubt that the capital will be the poorer for it.”
Unbelievably damaging to the top end of the prime London market
Ed Tryon, Director, Lichfields
“Stamp duty has long been over-due for reform and I am sure that George Osborne’s changes will be politically popular, however, this is unbelievably damaging to the top end of the prime London market and I am staggered over this increase in the rate. It will penalise those looking to buy over the £1.5 million and it will give little incentive for people to purchase over that level. Again this is another way of clobbering the rich in an attempt to butter up Middle England voters. I am pleased to see an end to the slab system and the rise up to £1.5 million appears fair, however those purchasing over that level will be left with a sour taste in their mouths. International buyers may well be deterred by this level of taxation and whilst there are complaints over the volume of international buyers in London, we do need to see their contribution to the economy as a positive. It remains a priority to balance the books but we really need to keep our competitive advantage in the UK to remain a key player in the global economy and continue making our country an attractive place for investment.”
Fairer and less divisive than a mansion tax
Andrew Ellinas, Director, Sandfords
“The entire stamp duty system has been in desperate need of a reform for a long time and it does come as good news that the Chancellor has finally looked at each property band and updated it to become a payment like income tax. The implanted new bands seem fairer and less divisive than Labour’s proposed mansion tax on properties worth more than £2 million.
“Even though house prices in the capital have increased more and more, this new system will mean that less Londoners will be dragged into paying huge amounts of tax as an apparent 98% of homebuyers will see a cut. This could increase the number of first time buyers in London, enabling them to get onto the property ladder, something that has proven to be very difficult, as it reduces the burden of stamp duty. It will also help young professionals and families that have been looking to take that second step and trade up the housing ladder.”
Another nail in the coffin for the ever mentioned Mansion Tax
David Hannah, Principal Consultant, Cornerstone Tax
“The Chancellor’s declaration to alter the slab system of Stamp Duty Land Tax (SDLT) to a graduated system is a welcome one.
“This reform means that SDLT will be cut for 98% of homebuyers, significantly lightening the burden for those looking to get a foot on the property ladder, thus smoothing price inequality and encouraging social mobility in the recovering economy.
“This overhaul of the SDLT system is long overdue. The fact that, up until now, a mere £1 increase in the price of a house can triple a purchaser’s tax bill has long been an injustice that has affected the property market. The new system will ensure that, in future, people will only pay the higher rate on the additional amount above the threshold.
“The changes, whilst welcome, were also accompanied by a new series of rates that punitively increases the rate on the most expensive properties. This is another nail in the coffin for the ever mentioned Mansion Tax, since the SDLT reform has ensured that the highest value homes are again, and now increasingly so, paying the largest proportion of tax. It is inevitable that whilst 98% of the country will pay less SDLT with these new reforms, the 2% that have just received a larger tax bill will likely be in London, which is where the Mansion Tax has always been aimed.”
A more progressive tax structure will help those looking to get on the ladder and will end up costing those with higher value homes more
Richard Donnell, Research Director, Hometrack
“Stamp duty is a perennial topic for both the Autumn Statement and Budget. It is an inefficient tax and acts as a barrier to market liquidity which is bad for labour mobility, but the flipside is that it makes a significant contribution to the Exchequer. Calls for change are beginning to manifest into reality, which suggests that the Government feels that stamp duty is starting to have a detrimental impact on labour mobility and the ability of households to access the housing market. The slab structure of stamp duty does create distortions at the price breaks and these have been around for years. Moving towards a more progressive tax structure will help those looking to get on the ladder and will end up costing those with higher value homes more.”
Likely to have very little impact in competitive prime hotspots
Rory O’Neill, Head of Residential, Carter Jonas
“This is good news for the majority of the population. It makes buying a house that little bit cheaper for many young buyers and hard working families plus it will reinforce the increasing confidence seen in the housing market.”
“Buying at over £1million however will be more expensive and there may now be an over reliance on transaction volumes in the £1million+ market to supply income to the Chancellor.”
“In hot spots such as central London, Oxford, Cambridge and Bath, it is likely to have very little impact as the competition remains intense. However, in the prime country market, which has already suffered significantly from the economic downturn and the last hike in SDLT, the additional tax on the sale of country houses is likely to restrict prices, and activity, even further.”
Suddenly stimulated a rather stagnant marketplace
Mark Charter, head of Oxford office, Carter Jonas
“The Chancellor’s unexpected housing market shake-up today has stimulated a rather stagnant marketplace awaiting Spring activity. We have just seen three deals with guide prices in excess of £1.5million scramble to exchange before midnight tonight in order to save our clients around £20,000.”
A progressive structure is a fairer way of calculating stamp duty
Matt Cobb, Director, Hatton Real Estate
“In my view, the concept of a progressive structure is a fairer way of calculating stamp duty. Values were sometimes limited by the previous stamp duty thresholds and we may now see a broader range of price points in the market, previously you wouldn’t ever really market a property for say £505,000 or £510,000 as stamp duty would increase from 3% to 4% north of £500,000. Overall the new structure is good news for property worth under £937,500 where there will be some savings, although I suspect transaction volumes for property priced at £1.5m plus will reduce slightly. For first time buyers the new changes will be welcome news.”
A lot of lawyers will be working late into tonight
Jamie Lester, Haus Properties
“Whilst the stamp duty reform is great news for those purchasing property below £925,000, it is likely to send shockwaves through the London market, particularly in the £1.5m-£2m price range. This market has been especially active with buyers sticking below the 7% stamp duty and proposed mansion tax thresholds. These buyers will now have to pay a significantly higher amount. For example, someone purchasing a £1.9m property would be paying £95,000 under the old stamp duty rules, whereas under the Government’s reforms announced by the Chancellor today, they will be paying almost £50,000 more at £141,750. However, those buying just above £2m won’t be quite so heavily hit, for example, someone purchasing at £2.1m will now be paying £165,750 – an increase of £18,750.
“We are already seeing the affects of the reforms – we were due to exchange on a £2m property this week and the buyer is now pushing to do this today. I expect a lot of lawyers will be working late into tonight to exchange on sales between £1.5m and £2m!”
It is clearly fairer the lower down the price range you go
Matthew Dabell, Director, Aspire Estate Agents
“The current bandings are punitive and any sane person could not argue for this sort of slab system. So the news today of abolishing the old rates is great to the extent it is clearly fairer the lower down the price range you go and supposedly will make it cheaper for 98% of buyers. This is clearly a counter to the possibility of a Mansion tax being introduced and it does have an immediate effect on property purchases in London above circa £1.2m – at £1.25m you will pay a modest extra £6250 but at £1.5m an extra £18,750 and at £2m a massive £43,750. Of course the higher up the range you go the difference grows even further.”
Cartoon by George Leigh