Stamp Duty and the summer statement.
Winning move on duty.
By Deborah Stone.
DEVELOPERS have been calling for stamp duty reforms for years, so it’s no surprise the land tax holiday in England and Northern Ireland has been welcomed by a housing industry hit by Brexit uncertainty, coronavirus lockdown and now recession fears.
But how will Chancellor Rishi Sunak’s suspension of stamp duty on properties up to £500,000 from now until next April affect those planning to move or buy their first home? The answer is almost as complex as stamp duty itself. While England and Northern Ireland have the same sliding scale of fees, they are different in bothWales and Scotland were, as yet, there have been no announcements of a similar suspension.
And then there are additional fees for those buying second homes, whether to use themselves or rent out. This second set of taxes remains in place.
First-time buyers are generally regarded as the key to a healthy housing market but they are already exempt from paying stamp duty on the first £300,000 of any house they buy so, because of regional price differences, only those in
London and the South East are likely to benefit much.
But it is good news for those wanting to move up the ladder, as Jackson-Stops chairman Nick Leeming confirms: “Upsizers across the country are set to gain the most from this stamp duty holiday, with savings of nearly £15,000 made available to those purchasing at the top end of this newly created stamp duty bracket.” Leeming says the tax has put buyers off in the past few years and adds: “Forty-one per cent of our clients believe there should be a wholesale reduction in stamp duty across all price brackets.”
Stamp duty of five per cent is still in force in England and Northern Ireland for properties from £500,001 to £925,000, with 10 per cent payable on homes from £925,001 to £1.5million and 12 per cent on anything over that.
THIS is one of the reasons why older people hoping to downsize from large family homes have found it so difficult to sell. John Tonkiss, CEO of over-60s homes developer McCarthy & Stone, says: “We’ve long argued that high moving costs have stunted the housing market. They keep older people stuck in large homes and prevent new chains being created that would ultimately benefit young people and first-time buyers.”
And Eugene Marchese, co-founder and director at later living developer Guild Living, adds: “A permanent stamp duty cut for ‘last-time buyers’, putting them on the same footing as first-time buyers, would help the thousands of people in later life, who need and want to move into an age-appropriate home, make that decision in the right way, without an arbitrary time limit imposed upon them.”
Despite some fears that the next six months will see prices pushed up and that demand will slump next April, the holiday has been very well received.
“The holiday could save buyers thousands of pounds, giving many more the opportunity to step on to, or climb up the property ladder,” says Inland Homes’ sales and marketing director Vicki Noon.
And Tim Nutt, group residential managing director of Shanly Homes, sums it up when he says: “Chancellor Rishi Sunak has made history with these extraordinary budget statements.
“It is excellent news for so many, from tradesmen to suppliers of all our goods and services and the many homebuyers who will now be able to afford to take the next step in their property journey.”