Boris Johnson has made a bold promise to abandon all levies on properties valued under £500,000. He also intends to lower the top rate of stamp duty tax on the most expensive properties (valued over £1.5m) from 12% to 7%.Home movers planning on buying property under the half a million-pound mark will also benefit from Boris’ stamp duty reforms.
While George Osborne’s changes in 2014 lowered stamp duty for this group, this change would make them exempt from stamp duty altogether. The top end of the property market could get a boost – and prime London property prices may increase
Tax experts at the Association of Accounting Technicians (AAT) say Johnson seems to have taken a liking to the idea which they came up with a few weeks ago.
He has already discussed the proposal with them and requested further details so he can include the measure in a tax and spending review that he intends to make prior to a first budget in the autumn.
“The AAT is naturally pleased that Boris has agreed to look at our long-standing proposal to switch stamp duty liability from the buyer to the seller,” said Phil Hall, head of public policy and public affairs at the AAT.
“This will save the taxpayer £700 million a year by rendering first time buyers’ relief redundant.
“It will also protect the £9 billion of revenue stamp duty generates as it will still be paid in full, simply by different people. It is also much more progressive as it will be paid on the lower priced property being sold rather than the higher priced property being bought.”
The final details of the measure have not been revealed, but currently, landlords pay a 3 per cent stamp duty surcharge when buying a property to rent.
Anyone purchasing a buy to let home pays standard stamp duty rates unless another landlord is making the purchase.
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Impact on landlords
It is also worth bearing in mind that while successive governments’ policies have a clear impact upon landlords, the truth is still in many parts of the country, homes are in short supply, whether for sale or for rent. This is good news for landlords who are content and able to remain in the property market. The predicted increased demand and rent rises should provide reassurance that objectives are still achievable, and that it’s more than worth their while to retain their property as a long-term investment.
Johnson has previously discussed his intentions to make sellers in England pay stamp duty instead of buyers, as this would increase the tax take for the Treasury by an anticipated £700 million a year.
Johnson’s plan would add £7,367 to the selling costs of an average priced £197,349 terraced house in England if stamp duty continues to be charged at the same rates.
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Extension of Right To Buy
Boris Johnson stated he’s committed to building more affordable homes and has hinted at the extension of Right To Buy.
Johnson’s intentions reveal that he likes to prioritise an increase in overall housing supply over provision of subsidised properties for low income earners.
In addition to this, Property Reporter, Graham Norwood, recently wrote a great article which reminded us of Johnsons’ Conservative conference fringe speech, where he expressed a strident commitment to private home ownership. In his speech, he related his first experience of seeing poor quality rental flats as a reporter on the Wolverhampton Express and Star, and he hinted at support for the continuation or even possible extension of Right To Buy.
Expected changes across the housing market
Boris has previously suggested some changes that he may introduce. Those that have been published so far include:
Supporting first-time buyers- more investment opportunities
Johnson Boris supported the ideas published by the right-wing think tank ‘Policy Exchange’, They included providing developers with incentives to build ‘beautiful homes’, incentivising homeowners to downsize through better availability of retirement homes, and continuing support for new homes to be constructed on brownfield land. He also favoured a review of how first-time buyers are helped onto the housing ladder, in the light of Help to Buy’s withdrawal in the next few years. Perhaps the most interesting initiative of all is the proposal to ‘develop fifteen beautiful new towns on the edge of London’ which could lead to more investment opportunities.
Boris Johnson was elected as prime minister on 23 July; further details of these proposed changes will become apparent in the coming weeks. Only time will tell what Johnson’s appointment really mean for the property market. What is certain however is that he now faces the Brexit he championed, but most of the country is still guessing as to how things will unfold.
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