Sunday Post: Overhaul sparks flurry of activity
Thu 04 Dec 2014
The stamp duty overhaul has already sparked a new flurry of housing market activity, with estate agents
predicting a New Year bounce in sales.
Some agents reported seeing an immediate impact following the changes announced in yesterday's Autumn Statement, with buyers calling up within minutes to add an extra 10,000 onto previous offers. Others reported sales of top-end homes being rushed through in order to beat the hike in the tax that thosebuying the most expensive properties would see. In one case, a buyer in the Notting Hill area of London had their sale fast-tracked in order to save 170,000, according to an estate agent.
Mark Hayward, managing director of the National Association of Estate Agents (NAEA), said the housing market could well see an uplift in the New Year.He said the announcement had had a positive response from its members, particularly those dealing with housesales in the "middle market pinch points" of around 250,000 and 500,000.
Mr Hayward said that with many people preoccupied with their preparations for Christmas, the New Year couldbe the period when people decide the time is right to put their homes on the market. He said: "They will have more choice and they will have a little bit more money."
The reforms have put an end to the much-criticised structure of stamp duty, which meant that home buyers wereliable for tax at a single rate on their entire property price, depending on what price bracket the home they werebuying fell into.
From today, stamp duty will be levied in a graduated way, like income tax. Buyers will only pay the rate of tax on the part of the property price that falls within each tax band. Some 98% of people who pay stamp duty will see the amount they pay cut as a result of the changes, meaning a4,500 saving for someone buying a family home with a typical price tag of 275,000.
The tipping point comes above 937,500, where the stamp duty cost of buying a home remains unchanged, withpeople buying more expensive homes facing higher costs than they would have done under the old system. Mr Hayward said the changes had caused some concerns at the top end of the market, where he said the"spectre" of Labour's proposed mansion tax was also hovering. He said that activity could slow temporarily at the top end of the market as it picked up elsewhere.
Keith Gorny, prime sales director at London-based estate agent Marsh and Parsons, said property sales which
may otherwise have drifted into next week were "rushed through" yesterday.
He said: "In one instance, a house in central Notting Hill was fast-tracked to save the buyer an additional
170,000 in stamp duty - the 10 working days allowed for the conveyance process was reduced to four hours." Analysis from Savills suggested people buying a home worth between 1 million and 2 million would see theirstamp duty bill increase by around 13,500, based on the average value of sales in this range which had alreadytaken place this year.
Lucian Cook, Savills UK head of residential research said: "At the top end of the market, experience tells us that
an increase in tax liability takes time to be absorbed, though we expect these changes to have less impact than
an annual tax in the form of a mansion tax might have had."
Andrew Hipkiss, a regional representative of the NAEA who is based at Walton and Hipkiss estate agents inHagley in the West Midlands, also saw an immediate mood change among buyers. He said: " We saw increased offers from buyers within 10 minutes of the autumn statement stamp dutyannouncement, with an average increase of 10,000 to each offer."
One example included a property for which a potential buyer had offered 260,000. Following the announcement, this offer was upped to 270,000, he said.
Halifax, which predicted previously that house prices would increase at a slower pace in 2015 than they had donethis year, said yesterday's stamp duty announcement had not caused it to revise its forecast that property valueswould edge up nationally by 3% to 5% across next year.
A Halifax spokeswoman said it expected the overhaul would prompt a "modest boost" to house sales and it could
also have a slightly negative impact on the top end of the market, particularly in London.
She said: "Overall, it does not affect our 3% to 5% price increase prediction."
David Newnes, director of Your Move and Reeds Rains estate agents, said it should be remembered that across
Northern England, Wales and Northern Ireland, the average price of a first-time buyer home was still less than
125,000, meaning it was not liable for stamp duty in any case.Research conducted by Yorkshire Building Society earlier this year found that for first-time buyers and those whowere already on the property ladder, paying stamp duty was the second biggest cost challenge they faced, afterraising a deposit.
Tanya Jackson, Yorkshire's head of corporate affairs, said the new system represented "a dramatic improvement"
and made almost all buyers better off.
But she said it was worth bearing in mind that that the starting point at which stamp duty kicked in remained the
same as it was yesterday, at homes worth over 125,000.
This would still potentially lead to more buyers being pushed into paying stamp duty as house prices increased,