Much is made of the impact of political uncertainty on the property market. However, one aspect of current policy is holding the market back more than any speculation in the media. Stamp duty stands at a crushing 10% for properties valued at over £1 million.
Buyers are being forced to spend another £100,000 of tax, on top of the huge amounts of tax they are already paying on their income, when buying one of these luxury homes. That rate increases to 12% at over £1.5 million. This staggeringly unfair tax is putting buyers off when they are considering investing in one of these properties.
The effects of their consequent reticence are rippling through the rest of the property market. Families who are looking to move into £500,000 homes are being faced with an extra £25,000 stamp duty bill. Homeowners aren’t upsizing, homes aren’t selling, and some estate agents are struggling financially. A study completed in 2018 by accountants Moore Stephens showed that at least 7,000 estate agents were at risk of going out of business. Rises in stamp duty had compounded financial pressures that they faced from severe online competition and a government ban on charging certain fees when letting properties. As an industry we need our government to help us to grow, in the same way that it helps so many other industries in the UK to prosper.
In that same year one of the industry’s biggest names, Countrywide Properties, issued four profit warnings in eight months, highlighting that even household names were not immune from the current malaise. Foxtons saw their profits fall 65%, despite being based in London, a city which includes some of the world’s most expensive homes.
The Chancellor’s Spring Statement on 13th March offered the perfect opportunity for the government to do something that would offer some real support to our industry and reduce stamp duty rates. Much was done to increase the supply of affordable homes, with the government agreeing to guarantee up to £3 billion of housing associations’ loans, to facilitate the construction of 30,000 brand-new homes. This provides first-time buyers with the help they need to take those crucial first steps onto the property ladder. However, all sections of the market as a whole need just as much assistance.
Disappointingly, nothing was done about exorbitant stamp duty rates, which continue to act as a deterrent against the purchase of large properties. When those first-time buyers are ready to move into a bigger home, the current rates of stamp duty may cause them to delay their purchases. Unfortunately, a number of estate agents may have gone out of business by the time these buyers are ready to move again, if nothing is done to provide their businesses with some relief from the hugely challenging combination of market conditions that they face every day.
We are calling for an immediate and substantial reduction in stamp duty across all tiers, so that the property market can progress and estate agents across the UK can stay open and continue to serve their communities for many years to come.
Our Estate Agents give your home maximum exposure online & offline, getting it more views from potential applicants, therefore more offers, and ultimately the highest possible finishing value. This means you end up with more money in your pocket and you enjoy a higher quality service. Call us on 0800 862 0870, download our property app or book a free property valuation today.