Pre Budget comment
An estate agent's pre budget comment:
Q. With the Budget just a couple of weeks away, what would you like to see the Chancellor do to help the property market?
A. As always with any efforts aimed at boosting the property market, the problem is finding a way of doing so without fuelling a new housing bubble. Already widespread concerns have been expressed about this. Although there are obviously regional variations, the market seems to be recovering reasonably well at the moment, so I for one wouldn’t be in a hurry to see any big new stimulus introduced.
The one real exception is the issue of Stamp Duty, which most people agree is long overdue for a major re-think.
Stamp Duty is, of course, one of the most significant costs associated with buying and selling property. Unlike agency fees, however, which are generally paid by the seller, Stamp Duty is paid by the buyer. Precisely why the person who has just forked out hundreds of thousands of pounds to purchase something – as opposed to the seller, who has presumably just made a tidy profit on the transaction -- should also be obliged to pay thousands more to the Government, is just one of the more bizarre aspects of a tax that is deeply unfair in its workings.
Stamp Duty is levied at different rates, based on the value of the property concerned. There are two major problems with this. The first is that the thresholds haven’t by and large been reviewed since the mid 1990s, and are now grotesquely out of line with today’s property values. The second is that you pay the higher rate on the full purchase price – not just on the excess.
The market distortion that this causes is a very real concern. It results in large clusters of properties priced just below the next highest threshold, and none just above. Inevitably, it also helps encourage considerably higher asking prices for properties that just tip the scales into a higher bracket. You daren’t ask £255,000 for your house, because Stamp Duty triples for anything above £250,000 - so instead you ask £275,000!
Whether the Government is minded to listen to the industry and public on this is sadly, another matter. After all, Stamp Duty is its current form is a huge earner for the Exchequer.