Nick Churton of Mayfair Office looks ahead to the March Budget. The year has started well in the property market, but what could the Chancellor do to really get things moving?
On the 11th of March, Budget Day, all eyes will be on our new Chancellor of the Exchequer, the Rt Hon Rishi Sunak MP.
One group of English taxpayers will be especially interested in what, if any, changes there are to Stamp Duty. This tax is payable by those buying property over £125,000 – although first-time buyers aren’t liable for stamp duty on homes up to £300,000. The taxation for Scottish and Welsh homebuyers is slightly different.
With the average house price in the UK now £134,742, this stamp duty affects a great many homebuyers. So much so, that over the 2018/19 tax period, the government collected almost £12 billion in stamp duty revenue. A cynic might think, small wonder the government is actively persuading the population to buy homes.
But the problem with high stamp duty is that it does the opposite. It deters people from moving – prevents people in larger homes, they don’t need, from downsizing and selling to people who do need them. It stalls the market and prevents a natural flow of discretionary buying and selling.
A previous Tory plan was to overhaul stamp duty by raising the threshold from £125,000 to £500,000 and lower the top rate – which applies above £1.5m – from 12% to 7%. But this was dropped from the last election manifesto. Could the Chancellor resuscitate this policy? It would greatly help the housing market if he did.
Although the introduction of a mansion tax is looking unlikely, overseas buyers will worry that the Chancellor will introduce a 3% stamp duty surcharge. This tax would include ex-pats wanting to move back home – after Brexit, more likely than for many years. This levy would be on top of stamp duty already payable, including the 3% surcharge on second homes and buy-to-let properties.
Successive chancellors might not have been precisely helpful to the housing market. Now that this government seems keen to build infrastructure, perhaps they will be inclined to treat housing – and flood defences - with the same importance the population does. Railway lines may be necessary but aren’t good homes and a buoyant property market more so?