Leaders COO, Clare Tobin
We welcome the changes to the stamp duty system announced by George Osborne in today’s Autumn Statement. The old system was outdated and completely inappropriate for today’s house prices, especially in the South. Rather than the previous ‘slab system’ the rates of SDLT payable will now be based on the proportion of the purchase price within each band. We can see this having a positive impact on the housing market, allowing more people to get onto the housing ladder because those currently saving for a deposit will not have the added burden of having to also save for high stamp duty costs, which should allow them to buy sooner.
The changes are unlikely to have a huge impact on the rental market. Although some people currently renting may now be able to afford to buy because of the changes, there will continue be plenty of demand for rental properties because renting will still be more affordable and flexible for many people. We may see property prices rising in some areas, as those selling properties around the old bands seek to achieve higher sales prices rather than holding them below a threshold as they would previously have done.
Overall the changes are likely to have a positive impact on investors who may now consider a greater variety of properties due to these changes; where previously a property at £275,000 would have incurred a 3% stamp duty rate of £8,250 – immediately reducing the return on investment in the first year – this will now be just £3750.
With more investors entering the market tenants will benefit from more choice of properties. As demand for small family homes is increasing - and this type of property would usually have incurred a high stamp duty cost for investors - these changes are likely to improve the availability of this type of property which will in turn allow some tenants to climb the rental property ladder.
We will also be pleased to see an end to the common and questionable practice of people putting in offers just below the stamp duty threshold and paying extra for ‘fixtures and fittings'.
The industry has been crying out for these reforms for many years. The only disappointment is that the Chancellor did not choose to raise the bottom £125,000 band, at least in line with inflation, given the extent to which house prices have risen in recent years. That would certainly have helped more first time buyers onto the ladder.