What is going to happen to Stamp Duty on 11th March?
Brixton Property Market
What is going to happen to Stamp Duty on the 11th March and how will affect the value of your Brixton Property?
3% additional Stamp Duty surcharge on non-UK resident buyers?
Some are asking if Sunak will impose what was promised with the 3% additional Stamp Duty surcharge on non-UK resident buyers? I have certainly heard in the Estate Agent community that foreign buyers are trying to rush through their sales in central prime London (Park Lane/Mayfair etc etc) before 11th March to ensure they don’t get hit with a new tax.
Removing Stamp Duty on properties below £500K?
Will we see a reappearance of Boris Johnson’s hitherto specified aim of removing Stamp Duty below £500K, consequently theoretically saving homebuyers many thousands of pounds?
Stamp Duty liability to be moved from homebuyer to home seller?
What almost unquestionably won’t happen is the earlier idea of switching the Stamp Duty liability from homebuyer to home seller. This would stall the property market, would probably cause political fallout among 688,300 homebuyers who paid Stamp Duty last year alone, make homes ‘appear’ more expensive as house sellers would inflate the asking price to try and recoup some of the tax, yet ultimately could be seen as ‘re-arranging the deckchairs on the Titanic’.
However, opinions are divided on what, if anything, will be included in the budget.
Most believe that the extra 3% for foreign nationals is an almost certainty, and if it isn’t implemented straight away, it will be in the Autumn Statement. Many believe the Chancellor could also decide to repay the favour to those in the North who turned the Election map ‘blue’ on the evening of 12th December with actions to enhance the housing market north of the M62 with stamp duty changes. The best way he could do that is to raise the threshold from the current £125k.
When Boris ran for Tory leadership back in May 2019, he said that he wanted to expand the threshold at which you begin paying stamp duty from £125k to £500k, which when you consider 7 out of 8 residential sales in 2019 were for homes below £500k, that would have a considerable effect. If the Stamp Duty threshold had been raised to £500k in 2019, then 700,400 homebuyers in England would not have paid any Stamp Duty Tax.
49.8% of Brixton properties sold last year were below £500K
Of the 669 properties sold in the last 12 months in Brixton, 336 of those properties sold were over £500,000 (bucking the trend of the rest of Greater London where 44.9% of properties were below the £500k level).
Yet the cost to the HM Treasury would be significant. If all properties below £500k were exempt, the government would lose £2.22bn in tax receipts. Of course, this could be made up with extra tax on empty properties or increasing the second homes Stamp Duty levy from the current 3% to say 5%, which would raise an additional £1.12bn on top of the current £1.68bn it raises for the Treasury, yet it would have a negative effect on buy-to-let landlords buying additional homes.
So, what will happen on 11th March?
The 3% additional levy for foreign buyers is almost certain (of which we don’t get many in Brixton – as they tend to buy in prime London areas which is of course the City of Westminster and the Royal Borough of Kensington & Chelsea, and parts of the boroughs of Hammersmith and Fulham, and Camden), yet I have a feeling that ultimately the Government doesn’t want to rock the boat on the wave that is being rode by the property market on the ‘Boris Bounce’ since December. I also doubt any changes will be made to first time buyer Stamp Duty relief, as 22% of all property transactions in 2019 were to first-time buyers, and whilst it cost the Treasury (or saved the first-timer buyers) a total of £539m in Stamp Duty relief (an average of £2,411 each), the Government are keen for first time buyers to get onto the housing ladder.
Ultimately, we can only wait until Mr Sunak opens his red leather box on 11th March to find out what will happen. I will of course report back after 11th of March on what changes to the tax regime will affect the Brixton property market going forward.