Stamp Duty move no remedy for UK property market


Liam Bailey comments.

The changes to Stamp Duty announced today amount to a tax on London - only 44% of property sales will slip under the new zero-rate band compared average of 74% in the rest of the country. In addition well over 60% of all £1m+ transactions affected by the new 5% rate take place in the capital.

The removal of stamp duty for first-time buyers purchasing properties under £250,000 is a welcome move and will benefit the new-build market that has been particularly hard hit by the housing downturn. Even in London, 44% of the properties sold last year were below £250,000. In some parts of the UK virtually all the housing stock will now be free of stamp duty for first time buyers. 

At the other end of the scale, the decision to increase the rate of stamp duty on properties worth over £1m from 4% to 5% is less welcome, although not entirely unsurprising as there is great public pressure for the perceived rich to pay more tax.

For the super-rich purchaser the increase will be little more than a minor irritation and we do not expect it to have any impact on the market for houses worth over £3m. For houses worth around £1m there will be pressure from buyers to pull back asking prices below the new threshold to avoid paying the extra stamp duty."

Notes:

Regional breakdown of property transactions worth under £250,000 or over £1m

 

Transactions up to £250k

Transactions £1m and above

Total transactions

Implied % of stamp duty free transactions

Implied % of 5% stamp duty transactions

East Midlands

41,377

35

47,526

87%

0.1%

East of England

50,577

295

69,109

73%

0.4%

London

29,561

2,665

67,696

44%

3.9%

North East

20,014

17

22,086

91%

0.1%

North West

53,242

90

61,023

87%

0.1%

South East

67,569

1,001

106,465

63%

0.9%

South West

51,453

203

69,600

74%

0.3%

Wales

22,795

8

26,007

88%

0.0%

West Midlands

40,291

46

47,882

84%

0.1%

Yorkshire & the Humber

42,728

50

48,892

87%

0.1%

England and Wales

419,604

4,410

566,286

74%

0.8%

Source: Knight Frank Residential Research, Land Registry

Article by: Liam Bailey www.realestateweb.co.za