STAMP DUTY BOMBSHELL -
WHOLE MARKET WILL SUFFER, NOT JUST RICH SAYS TREVOR KENT
21st March 2012
The unwelcome announcement in today’s Budget Statement that a hike to 7% in Stamp Duty Land Tax for property purchases over £2m will deliver a near-fatal blow to home sales AT ALL PRICE RANGES, says TREVOR KENT former president of the National Association of Estate Agents.
“This misguided Coagulation of a Government, bereft of new ideas stuck in a mire of increasing old taxes, seems to think that taxing a home buyer £140,000 for the privilege of buying a £2m home will produce them bundles of cash to spend elsewhere and buy them votes from the approving less well off, come the election - it won’t!
Every homeowner/voter will be hit, not just the wealthy. 70% of first time buyers (themselves taxed £1,350 when buying at £135,000) rely on the successful progression of ‘chains’ of sales. Their seller may be buying at £300,000 (and paying £9,000 tax), the next buyer in the chain is paying £600,000 for their home (and writing a tax cheque for £24,000), the owner of that home is buying at £1.2m and is already hit with a £60,000 tax shock. To then LEGISLATE that that the next purchase in the chain will cost the buyer £140,000 of savings to buy at £2m will probably mean NO SALE and the whole pack of cards collapsing and even the £135,000 buyer loses out.” adds Trevor Kent.
Higher Stamp Duty always results in property price pressure, with this decision today there is little doubt that prices will fall across the board, some may think ‘great’, but mortgage lenders will not – they rely on the expectation of a gentle long-term rise to safeguard their loans. As we have seen only recently to our cost, their only answer to dropping prices is to lower their loan-to-value levels – they’ll do that tomorrow in a flash as house purchase costs rise further through government taxation.
Even estate agents, of all people, recognise the stultifying effect of high moving costs and have trimmed their own charges in recent years to try to encourage the market, yet the Coalition think the opposite and seek to earn £234,350 from the chain of only 5 sales exampled above (for even less work than the agents involved)! Like the 50% income tax rate, punitive charges do only one thing, kill the golden goose and starve the populous.
“The Chancellor assured us today that off-shore and corporate envelope top level purchasers will be stopped from avoiding the Duty , but where’s the legislation to enable this policing change from ‘midnight tonight’ – not there. The only souls that will be paying 7% tomorrow will be the law-abiding middle class, billionaires will still be avoiding the tax on major property purchases for months, if not years” concludes a very disappointed Trevor Kent.
is a regular property market
President of the National Association of
He has an estate agency in Gerrards Cross, Bucks.
© Trevor Kent