Stamp Duty Woes!!
A little over a month has passed since the chancellor announced the budget, the dramatic changes in Stamp Duty and alterations to off shore property ownership. These changes have already had an affect on the market across all price levels. While the end of the stamp duty holiday for first time buyers doesn’t affect our client base with a 1% drop in prices nationwide reflecting a rapid fall in demand it is just one of a number of changes that in my opinion has negatively changed the market.
The introduction of the 7% Stamp duty rate for properties over £2mn caused an overnight correction in prices across London most notably causing a shift in confidence for both vendors and purchasers alike. While vendors on or just above the £2mn cap have had a kick in the nether regions knowing full well that any offers would skim just below the cap; purchasers too have had to think twice about the additional 2% tax and have have factored this into any offers made. Problem is that these changes do not seem to benefit either party, so I’m afraid the chancellor got it wrong on this one!
Now lets face facts, tax avoidance has always been a delicate issue and I do not condone the practice however, the closing of the loop hole for off shore firms with a 15% flat tax on residential property has also had the effect of slowing down markets. Property in Central London has bucked the trend predominantly through foreign investors from across the globe investing here to mitigate global uncertainty and the positive returns that are to be made. While portfolios and off market investments were steadily trading hands now we see more of a window shopping approach and a more tentative approach to offers (cheeky to the point of laughable) being made slowing the market down. Will the new tax approach end up being a massive shot in the foot reducing the government purse and slowing the property markets, we’ll have to wait and see, but so far it doesn’t look good!