Whilst many are still reeling from the increase in Stamp Duty which was announced in April of last year, it seems all have forgotten about the impending Autumn budget scheduled for Wednesday 22nd November 2017. Whilst of course only loose predictions can be made, there is little doubt that the Chancellor of the Exchequer, Philip Hammond, will have to address the housing crisis as he outlines the Autumn budget; however, will there be any changes?
Given the criticism that the 2016 Spring budget was met with, the industry can only hope that reform will be made to Stamp Duty Land Tax (SDLT) but it is difficult to say whether any action will be taken. The increase in SDLT caused a detrimental effect on property investors as was shown by a drop in buy-to-let purchases so it is possible that Mr Hammond will rethink his stance. As it currently stands the change in 2016 means that a new 3% surcharge has been applied to buy-to-let and second home purchases with a new lower initial threshold of £40,000. As a result, this means that more transactions than ever will consist of Stamp Duty Land Tax so why would the government change this?
Just recently, Mr Hammond appealed to his fellow Conservatives in a meeting of the Conservative’s 1922 Committee in Westminster as he asked them for help in reclaiming the lost support of the youth. Perhaps this insecurity within the Conservative party could prompt a rethink in housing taxes. Some have suggested removing the 3% stamp duty for older homeowners thereby encouraging people to downsize whilst opening up the market for young families or first time buyers.
As of this week, the Welsh are set to reduce the SDLT owed by 9 out of 10 buyers. A property within the threshold of £250,000 could see a fall of up to £500 in the amount of stamp duty owed. While a property within the threshold of £150,000 will demand no SDLT at all. However, the catch is that there will be further bands for properties in excess of £250,000 and therefore attract higher rates of SDLT; but it is worth thinking whether England will consider following suit.
If we return to Philip Hammond’s plea to his fellow party members in helping the youth in order to gain political support, then we can hope change will be made to housing policy. However, if we are to be realists in this situation it is unlikely the government will reassess its position on SDLT. We only have to look at the figures of the SDLT intake since the introduction of the 3% surcharge to see why. Data from Blick Rothenberg shows that an estimated extra £2 billion has been raised in tax since the change. It is clear that as housing prices rise the surcharge has only succeeded in generating extra tax for the HMRC. Whilst all well and good, the government will have to think about whether the current SDLT policy is working to achieve fairness in the property market or simply causing resentment amongst first time buyers and thus creating more problems than it solves in the long run.