For the most part, Osborne focused on the United Kingdom’s successful economy this year, citing an impressive 3% growth. This is not only the highest growth out of all G7 nations, but it is backed up by low employment figures and forecasts showing the deficit will be halved. Overall the Autumn Statement was positive from an economy perspective, although revisions to inflation expectations mean cash savers will receive lower returns than expected.
However, the main headline of this Autumn Statement was announced last of all- Stamp Duty has been massively changed. The old ‘slab-like’ tax was highly criticised for being archaic, restrictive and simply unfair. The cost of Stamp Duty used to be decided by which price bracket the house fell into. For example, the price bracket for properties under £250,000 was 1%, but rose to a significant 3% for those above.
Investors in X1 Media City will now save over £800
On the other hand, the new system has been likened to income tax. Properties can no longer be set in one category and they are split amongst the various bands depending on how much of the total value falls into each band. For example, a £169,950 three bedroom apartment in Knight Knox International’s X1 Media City used to incur 1% stamp duty, or £1699.50, whereas the new system will only cost investors £899, in total saving over £800.
This announcement has been received in a number of ways, with the majority of people excited to see how these changes will affect the property market. It is forecasted that 98% of homebuyers will save money, with the government anticipating a much needed boost in the market, as more are enticed by these lower prices.
However, there is a cut-off point where Stamp Duty will start to be more expensive. Properties over £937,000 will suffer higher prices. Peter Rollings, CEO of Marsh & Parsons, pointed out how this will not help the housing market in the capital: “In Prime parts of London, where 56% of property is worth £1million or more, this will impact a significant proportion of ordinary working families.” Osborne countered this, claiming that even in London, “91 percent of those paying the duty will be better off under the new rules.”
It appears that these changes to Stamp Duty are the Conservative chancellor’s method of making the rich pay more, without taking on the title of Mansion Tax and all its connotations. Ed Tryon, Director of Lichfields property search agency, noted this, saying “It will penalise those looking to buy over the £1.5 million and will give little incentive for people to purchase over that level. Again this is another way of clobbering the rich in an attempt to butter up Middle England voters.”
On the other hand, Liz Peace, Chief Executive of the British Property Federation, saw these changes as positive. She believes the market will be more fluid and people will have more choice: “We are pleased to see other reliefs remain, such as for multiple dwellings, which is very important to the build-to-rent investment sector.”
Stephen Ludlow, chair of the estate agents Ludlowthompson, noted how well this would impact the buy-to-let market and yields for landlords: “The changes in stamp duty will see the biggest increase in net returns for more modest investments- city centre apartments, flats above shops, ex-local authority property and property in secondary locations.”
In conclusion, whilst the outcomes of the Autumn Statement seem to have divided property professionals, these reforms to Stamp Duty are overwhelmingly positive for the majority of buyers and investors. How these changes will affect the housing market in the long run remains to be seen, but for now many welcome the changes for what even Osborne described as a “burden” and a “badly-designed tax”. Now is the time to take advantage of these changes. With lowered inflation rates on the horizon, don’t let your money stagnate in an account.