By Joanna Norris, partner at Ratio Law
One of the most talked about points from last week’s Autumn Statement is the reform of residential property stamp duty, which will see anyone purchasing a property worth less than £937,500 paying less tax, with a corresponding rise for those above that figure. George Osborne said the changes, which came into effect at midnight on 4 December, would cut the tax for 98 per cent of homebuyers.
Following the announcement last Wednesday, a number of estate agents and solicitors saw a flurry of activity – especially in London – as people hoping to purchase higher priced properties rushed to exchange before the strike of midnight.
Some are criticising the stamp duty reform for targeting families in London and the South East, and there are worries from some that it will lead to average house prices increasing – just as they were beginning to level out again.
Ultimately, we will see a boost of activity in the property market. As well as being good news for estate agents, the likes of DIY retailers, furniture manufacturers and retailers and building and repair contractors should all benefit too.
But the one issue the stamp duty reform doesn’t address is the fact there remains a huge housing shortage in the UK. Although the Autumn Statement revealed a new garden city will be built in Bicester and Chief Secretary to the Treasury Danny Alexander made an additional announcement that the state had “radical” plans to build 300,000 new houses a year, it will be interesting to see what the next 12 months hold for the sector.
Housing is on the top of all of the parties’ agendas, as we looked at in one of our previous blogs, but it all very much comes down to who will win the general election in May – and whether the winning party stays true to its promises.
What do you think about the changes to stamp duty – should it be welcome news or will it simply push up property prices for your average house buyer?