Will chancellor Philip Hammond review stamp duty in his Autumn Budget 2017? Some believe this is what’s needed to keep the London housing market on track
The London Chamber of Commerce and Industry (LCCI) believes the impact of stamp duty on the London housing market is something that must be addressed by the Treasury in the upcoming Budget.
The last stamp duty tax reform, brought in by previous chancellor George Osborne back in 2014, meant the rate of stamp duty paid on 98% of property purchases was reduced. On the other side of the coin, Osborne brought in a tax hike for those buying at the higher end of the ladder – up to 12% for properties selling for over £1.5m.
According to the LCCI, further down the line, these changes are hitting London the hardest.
“The reforms of late 2014 were introduced in a very different political and economic landscape,” said the LCCI. “Since then we have had two General Elections and, most crucially, the decision to leave the EU.
“It is important to learn why there may be a reluctance for some buyers to enter into high value transactions,” the LCCI added, referring to the fact that estate agents have reported a decrease in sales of properties valued at more than £1.5m.
A tax holiday?
The LCCI believes the impact is not only felt in the property market, but affects the wider economy in general, with a reduction in the services of “lawyers, surveyors, designers and builders”.
With the Treasury now under increased pressure to address these issues after the recent Bank of England interest rate rise, some experts believe a stamp duty holiday for first-time buyers could be on the cards.
This viewpoint was backed up by Nimesh Shah, partner at accounting, tax and advisory firm Blick Rothenberg.
“The rate rise is bad news for first-time buyers and people moving home, as they will see the cost of borrowing increase,” said Shah. “There is more pressure now on the government to reform stamp duty land tax (SDLT) at the Budget on 22 November to help first-time buyers, and there could be a form of SDLT holiday announced.”
According to a Telegraph report, the odds of a stamp duty cut for first-time buyers coming into effect is 6/10.