The UK Government has announced its intentions to reform the home-buying process by addressing practices like gazumping. At the same time, with interest rates set to rise for the first time in a decade to 0.5%, industry bodies are also calling for the Government to scrap Stamp Duty in next month’s Budget to boost the economy.
Here’s our Budget prediction courtesy of Ian Peach, Partner & Head of Residential Property, Coffin Mew
“Residential property transactions are down around 14% nationally compared to last year and we’re running into a traditionally quieter period. If the Chancellor does nothing to boost the market then it may stagnate and he’ll be feeling the pressure to make changes.
“The Government is dependent on the income from Stamp Duty so I don’t think it will be scrapped altogether, but I would not be surprised if the liability was switched from buyers to sellers. This would break from tradition and would be seen as a radical change, but one that could breathe life into a slowing market.
“The Conservatives are going after younger voters, so the Chancellor may decide to scrap stamp duty for first time buyers. He may also look to ease tax liability for higher value properties as this section of the market has slowed the most, and I predict a measure to help older homeowners downsize by removing stamp duty for these potential movers.
“Conveyancers would prefer to see a far simplified system of rates that involve less complex calculations and considerations of individual scenarios, particularly with regard to second homes and higher rate duty application. Many find themselves being drawn into the role almost of a tax advisor without the relevant expertise.”
Rob Desbruslais, director at Desbruslais Chartered Surveyors, comments:
“Abolishing stamp duty would be radical and almost certainly won’t happen. In a country where housing is at a premium and prices already unaffordable, the last thing we need is a sudden surge of demand that could push prices even further beyond the means of most people.
“It would also encourage wealthy second home owners who often leave homes empty for occasional use, reducing supply further. If such a radical step were taken, these buyers would need to be excluded from the proposal.
“In Australia, where the comparison is made, there is a huge amount of space available for new build and houses are affordable. The markets cannot be compared.
“What we need is affordable housing, and in my view, abolishing stamp duty is simply a short-term fillip to a broken system that requires a more fundamental approach.”