Date Published 09 September 2019
For a long while, I`ve been amazed at how successive Governments have enjoyed the fiscal drag of increasing property prices but static stamp duty charges and we`ve even seen the introduction of surcharges for property that isn`t your main residence.
The problem is that it adds a huge burden to those that have to move and you can`t finance it. This means that people are moving less. In fact, in just 20 years we`ve seen the frequency of moving roughly half. Of course, there are other factors involved, but consider the average house price in 1997 was around £60,000 (UK wide) and stamp duty was 0% up to £60,000 and 1% for purchases above. Stamp duty costs were therefore reasonable.
The government revenue for stamp duty land tax in 2017/18 was £12,905 million, so we may not see changes to this, given the cash strapped nature of the Government. There are concessions for first time buyers, as apparently the government deem this demographic more worthy than a growing family that needs to move out of necessity.
So, this leads nicely to the point of this article: the new Prime Minister has indicated that he will be looking at stamp duty (although he`s said a lot of things, so please add pinch of salt) and research by Ludgrove Property has indicated that a 36% drop in stamp duty would increase transactions by 40% and revenue of £9 billion. Given that movers employ estate agents, solicitors, surveyors, removals and then spend money on DIY, it`s not hard to see how a tax reduction would lead to increased revenue in tax.
So, watch this space. If stamp duty is addressed, and Brexit gets a clear direction, then we could see a boom in activity. Which means now is a great time to upsize, before prices rise to reflect increased activity.
Director of @Home Estate and Lettings Agency
Director of About Mortgages