Stamp duty changes
By Jo Eccles
Chancellor George Osborne grabbed the attention of the property market last week, as he announced major stamp duty changes as part of the Autumn Statement.
The rules were set to come into force at midnight, which caused a widespread panic. In some cases buyers decided to exchange contracts despite missing key information and I also heard of purchases which were signed off just ten minutes before the deadline. Buyers would have almost certainly have had to pay their solicitors a significant premium for their overtime, but this would have been nothing in comparison to the extra £100,000 or more of stamp duty which they could have faced if they hadn’t exchanged in time. Some agents also banked huge fees that day, but others saw their pipelines renegotiated or fall apart entirely.
In my opinion, the change in stamp duty is a positive one. It will not affect those who as a result of rising house prices and inflation already live in high value properties. This was a major sticking point with mansion tax policies proposed by other political parties.
The changes will penalise some of those buying in London and the South East where higher property prices mean that more properties will fall under the higher stamp duty percentage, but will mostly affect those who can generally afford the higher fees. For example, someone buying a £20 million property will now face an extra £1 million in stamp duty, but there is a very strong argument that if you can afford to buy a property for this price, you can afford the extra tax. If not, it will be down to both the buyer and seller to share the extra stamp duty bill between them, the seller contributing by accepting a lower offer on the property.
The market is reeling from this recent change but I think this is a good replacement to our previously outdated stamp duty system. Whilst we might see a lot of fall-throughs and reduced volume of transactions in the short term, I think this is a much better proposition than the other mansion tax proposals which have been suggested in recent months.
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