Spare a thought for the poor millionaire now forced, through this year’s UK Budget, to pay more for the privilege of using central London’s booming luxury property market as a safe haven for his investment funds, away from unhealthy currencies. Spare a thought also for home-grown millionaires in other UK property hot spots. They too will be caught in this new 7% Stamp Duty trap of the Chancellor’s making. Any attempting to escape is futile – tunnelling under the higher tax barrier through the means of an offshore or foreign company has been stopped by way of a massive 15% Stamp Duty.
Will this have much impact on the property market generally? Not really, as the early introduction of these measures leaves no room for a mansion-tax-beating rush to buy, and this is a one-off measure aimed at those who really should be able to afford it. So the impact on sector values should be negligible. All in all this new measure will probably be met with a sigh of resignation rather than a decision to spend a million or two less, just to avoid the extra tax. But do expect to see fewer houses on the market at £2.1 million and more at £1.99 million. And, who knows, perhaps this top level of stamp duty could even become a trendy new status symbol for the wealthy.
Of greater significance is how the Budget affects the rest of the property market. Apart from the small tax benefit to the lower paid there seems little in the Budget to stimulate much greater activity, save for a few small pieces of new legislation that somehow fit into the jumbo jigsaw that is our nation’s fiscal recovery. But perhaps the Chancellor has taken the view, “physician heal thyself”. Under the radar of the British property press (which is none too sensitive) the market in many places has quietly been perking up. There have been rumours of first time buyers – tempted out of hiding before the end of their own special tax relief; also, even one or two mortgages have been granted. Up and down the country many estate agents cautiously report increased sales figures. This means several things: buyers are on the move and agents are valuing reasonably. Most importantly, sellers are listening to reason rather than the little voice of avarice that we all have, but which needs to be mastered when selling property in sluggish conditions.
The government’s move to relax the building rules in rural areas could vie for attention with the Budget. This should be of concern to everyone as it is our heritage which could be under threat of concrete. Visions of bulldozers parked on the village green will cause outrage. And when developers, who through the Budget will now receive some extra funding for new homes, meet head to head with Britons-in-bloom there will be strife. And there should be. But this relaxation may bring new life to struggling rural communities as well as providing much-needed housing. So it will be very much up to local planners to prevent a 1960s style architectural catastrophe. Also the public will need to demand thermally efficient, economical, affordable but stylishly attractive and appropriate homes which will sit comfortably in a rustic environment.
So, the verdict on the 2012 budget, as far as the property market is concerned, seems to be neutral.