The matter of stamp duty continues to be a sensitive subject ….and not just for the wealthy as the effect of this punitive tax is felt well beyond this sector.
The December statement in 2014 announced a different system where the wealthy were charged more stamp duty and the method of charging was reformed. The Exchequer hoped that this would be fairer and that it would also generate more tax receipts but on the latter, the opposite has actually been the case. Transaction levels have fallen significantly and accordingly tax receipts. In addition associated industries such as builders, decorators and furniture and kitchen manufacturers have seen their order books contract. The Exchequer sites other market forces for these weak statistics on stamp duty receipts such as Brexit and, at the top end of the market, the collapse of the Russian rouble!
Further reform in April last year saw a surcharge of 3% applied to those buying investment property. Significant activity and acquisitions were undertaken up to the date when this surcharge was to become effective and then, as is so often the case, a significant falling off thereafter.
From our perspective, a less onerous tax liability for purchases over £937,500, the point at which stamp becomes more expensive than prior to 2014, would be welcome as it is clearly having a damaging effect on the market in this sector. However we would like to see the government continue to encourage first time buyers with their schemes such as Help To Buy perhaps better funded because stamp duty receipts will improve because of this softening of the stamp duty charges and therefore more properties transacting. For buy to let investors, they’re being hit from all sides and so the government will need to be careful that they do not dissuade landlords as renting is the only option for many young people setting out on their careers never mind others who need to have a flexible lifestyle.