If you are buying a home in England costing more than
£125,000, you will have to pay Stamp Duty Land Tax on the purchase of your new
home. In the provinces, it’s called something slightly different, so if you are
buying a property in Scotland over £145,000 you will pay Land and Buildings
Transaction Tax (LBTT) and for any property over £180,000 in Wales you will pay
Land Transaction Tax (LTT). Whatever the tax is called, it is an important
factor when moving, when you consider that
Last year the average UK house buyer paid
£10,150 in Stamp Duty Tax alone
Now as soon as the date for Rishi Sunak’s budget was
set for 11th March 2020, conjecture in the Press began about what stamp
duty changes he may disclose on budget day. The Chancellor only sets the budget
for England and Northern Ireland, yet this is just as relevant for Wales and
Scotland. Even though Derek Mackay, the Scottish Finance Secretary said on 6th
February he has no plans to change Scotland’s version of Stamp Duty (LBTT),
more often than not, Stamp Duty rule changes in England are often adopted in Wales
and Scotland at a future date.
Some are asking if Sunak will impose what was promised in
the Conservative manifesto with the 3% additional Stamp Duty surcharge on non-UK
resident buyers? I have certainly heard in the Estate Agent community that
foreign buyers are trying to rush through their sales in central prime London
(Park Lane/Mayfair etc etc) before 11th March to ensure they don’t
get hit with a new tax. Or will he go even further, and will we see a reappearance
of Boris Johnson’s hitherto specified aim of eliminating Stamp Duty below £500k,
consequently theoretically saving homebuyers many thousands of pounds?
However, opinions are divided on what, if anything, will be
included in the budget.
Most believe that the extra 3% for foreign nationals is an
almost certainty, and if it isn’t implemented straight away, it will be in the
Autumn Statement. Many believe the Chancellor could also decide to repay the
favour to those in the North who turned the Election map ‘blue’ on the evening
of 12th December with actions to enhance the housing market north of
the M62 with stamp duty changes. The best way he could do that is to raise the
threshold from the current £125k.
When Boris ran for Tory leadership back in May 2019, he said
that he wanted to expand the threshold at which you begin paying stamp duty
from £125k to £500k, which when you consider 7 out of 8 residential sales in 2019
were for homes below £500k, that would have a considerable effect. If the Stamp
Duty threshold had been raised to £500k in 2019, then 700,400 homebuyers in
England would not have paid any Stamp Duty Tax.
97.4% of Huddersfield properties sold last year were
below £500k
Of the 3,549 properties sold in the last 12 months in Huddersfield,
only 91 of those properties sold were over £500,000 (interesting when compared
with Greater London where 44.9% of properties were below the £500k level).
Yet the cost to the HM Treasury would be significant. If all
properties below £500k were exempt, the government would lose £2.22bn in tax
receipts according to Savills. Of course, this could be made up with extra tax
on empty properties or increasing the second homes Stamp Duty levy from the
current 3% to say 5%, which would raise an additional £1.12bn on top of the
current £1.68bn it raises for the Treasury, yet it would have a negative effect
on buy-to-let landlords buying additional homes.
What almost unquestionably won’t happen is the earlier
idea of switching the Stamp Duty liability from homebuyer to home seller
this would stall the property market, would probably cause political
fallout among 688,300 homebuyers who paid Stamp Duty last year alone, make
homes ‘appear’ more expensive as house sellers would inflate the asking price
to try and recoup some of the tax, yet ultimately could be seen as
‘re-arranging the deckchairs on the Titanic’.
The 3% additional levy for foreign buyers is almost certain (of
which we don’t get many in Huddersfield – as they tend to buy in prime London
areas which is of course the City of
Westminster and the Royal Borough of Kensington & Chelsea, and parts of the
boroughs of Hammersmith and Fulham, and Camden), yet I have a feeling that
ultimately the Government doesn’t want to rock the boat on the wave that is
being rode by the property market on the ‘Boris Bounce’ since December. I also doubt
any changes will be made to first time buyer Stamp Duty relief, as 22% of all
property transactions in 2019 were to first-time buyers, and whilst it cost the
Treasury (or saved the first-timer buyers) a total of £539m in Stamp Duty
relief (an average of £2,411 each), the Government are keen for first time
buyers to get onto the housing ladder.
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