New Prime Minister Boris Johnson has suggested drastically raising the threshold for paying stamp duty from its current level of £125,000 to £500,000. He was quoted as having told a conference of Tory MPs in London that “I believe that, in this fantastic capital city of Europe and of the world, stamp duty is choking the market at the moment. We need to think about the way it is working and to see what we can do to free it up and give more people the chance of home ownership.
This speculation has created a concern for some housing experts who fear this uncertainty could lead to temporary distortions in the market if people delay purchases in the hope of paying less stamp duty if they wait as no official announcement or timeline for the reforms has been published.
“Boris wants to radically reform stamp duty. It could do with reform, but time not taken talking about it could paralyse an already-stagnating market” advised leading trainer and consultant Michael Day of Integra Property Services.
Perhaps the most radical change Johnson is understood to be considering is changing who is liable for stamp duty so that the seller rather than the buyer pays the tax.
In an interesting article from Zoopla they break down the pros and cons to the stamp duty shake up;
Sellers pay stamp duty instead of buyers
Winners: First-time buyers purchasing a home for more than £300,000, people trading up to the property ladder.
Losers: Those downsizing as they would face higher stamp duty bills on the home they are selling, rather than the one they are buying.
In contrast, Dominic Agace, CEO of Winkworth, said: “Any initiative to free up the housing market is good, so we’d be pleased to see Boris Johnson implementing some of his proposals as the new Prime Minister.
“It seems that his policies are designed to get the market moving, particularly benefiting home movers in London and the south-east, where the cost of moving has become a huge sticking point in recent years.”
Reduce the top stamp duty rate to 7% from 12%
Winners:Anyone buying a home up to £500,000, with those purchasing at the top end of this range saving nearly £15,000 compared with the current system.
Losers: HM Revenue & Customs. The change could decrease the stamp duty take by around £3.3bn a year, according to think tank Onward.