The British Chancellor Sajid Javid has hinted that there will be a change in stamp duty coming up this autumn but has denied that his preferred option is moving the property tax to sellers.
While he has not stated specifically that sellers will pay stamp duty rather than the present situation where it is paid by those buying a home, it was picked up by the newspapers are a likely options. He has now denied that.
“I’m looking at various options. I’m a low-tax guy. I want to see simpler taxes,” he said. As a former Secretary of State for Housing, however, we must hope that he will be very much aware of the pros and cons of stamp duty change. Just remember the backlash from stamp duty change introduced by former Chancellor George Osborne.
It is the case that removing the burden of stamp duty from buyers completely could help first time buyers be able to afford bigger properties. But it would put a heavier tax burden on those wishing to downsize. Research already suggests that older home owners are put off by paying so much to move to a smaller property.
Change is supported by the Association of Accounting Technicians (AAT) which has been campaigning for this change for several years and met Boris Johnson to discuss the plans earlier this summer.
It said that it has already had an exchange of correspondence with the new Chancellor on the idea. The organisation has also engaged with numerous civil servants, special advisers and politicians from across the political divide on the issue.
There is no doubt that the property tax system is seen as unfair and it could be much simpler, fairer, cheaper and more effective. The Prime Minister has also said that stamp duty change is on the agenda so it is highly likely that it will come, and before the end of the year.
It could be used to help boost the housing market which is still seeing the effects of delayed Brexit. Even the mortgage market is now showing signs of being affected by uncertainty. There was a rise of 8.3% in remortgaging in the UK in June 2019, with industry commentators saying that re-mortgaging is seen as an attractive option for home owners in the current economic and political uncertainty where some borrowers are adopting a wait and see approach to buying and selling, so re-mortgaging to improve an existing property is becoming increasingly popular.
There is also further evidence that the property market is slowing, particularly in England and London. The latest figures published by the ONS shows that annual growth is higher in Scotland and Wales.
Meanwhile, the latest figures from Rightmove show that asking prices fell by 1% in August, although this is lower than the usual seasonal dip. Nevertheless, they are just 1.2% above a year ago.
According to Miles Shipside, Rightmove’s director and housing market analyst, more buyers have cottoned on to the fact that it can be a good time of year to buy, with less competition from other buyers, and sellers typically more willing to accept a lower price.
But activity has been falling this year and the Government will want to boost the market after Brexit. The earliest possible announcement of stamp duty change could come in the next Budget, the date of which is not yet confirmed. It could come before the Brexit deadline at the end of October or after. Or an announcement could wait until the Spring Budget, although that may come too late for a Spring bounce.
Ray Clancy
Editor Property Wire
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