DBPR asked top London property experts what they want to see from Chancellor Philip Hammond in Wednesday’s Budget 2017.
Richard Bernstone, Director, Aston Chase
“In his Budget 2017 Mr Hammond really needs to rethink the hasty and ill thought SDLT review which he inherited from his predecessor Mr Osbourne, in the run up to the general election in 2015 which was supposedly the conservative answer to the voters as a response to Labour’s ill thought out Mansion Tax proposal.
Since December 2014, when the last review was introduced, we have witnessed a steady and more recently a severe decline in the volume of property transactions, especially in London and there is unquestionably a plethora of related industries and trades which too have been affected. These range from builders/retail/professionals (solicitors, surveyors, valuers, financial advisors etc),essentially beyond anyone simply buying or selling residential property, which must have an impact on tax revenue raised across the board and will continue to have a greater impact unless this unfairly punitive tax is redressed – something which many people now consider to be a tax on mobility.
Given I am a firmly believer that ‘every action has a consequence’, I cannot see that the current course of property taxation can result in anything other than reduced tax revenue across the board, and with a long term damaging effect on what we have always considered to be solid property based economy
So my wish list for Budget 2017 is:
- Abolish additional 3% SDLT on second homes/buy to lets
- Either refine the SDLT review of 2014 to create several tiers of higher rate tax on properties starting at say 7% from £1.5m – 4m and increments of an additional 1% for every million pounds thereafter …or
- Abolish SDLT and replace it with a fairer Land Transfer Tax , payable by the vendor of the property as opposed to SDLT which is payable by the buyer and currently non – fundable.
Owning our own home has historically been a British aspiration and currently the cost of moving, and the ‘dead’ money required is simply unaffordable to the majority and this applies to all home owners, (not just first time buyers) who may be ‘property rich’ which doesn’t mean ‘cash rich’.”
Mark Parkinson, Partner, Middleton Advisors
“There have been so many surprises in recent budgets and statements one is wary of making any predictions. Stamp Duty remains one of the key reasons why the market is still stuttering in London and why there is so little supply outside London as many are choosing to stay put and extend rather than move up the ladder.
It is still difficult to see how politically a reduction in stamp duty could be implemented, maybe through another ‘relief’ or exception rather than reducing the headline rate?
Other than that the budget will need to be pro business and pro-employment giving businesses the confidence to expand during these uncertain times.”
Charles Curran, Principal & Market Data Analyst at Maskells
“The Chancellor needs to cut stamp duty in Budget 2017. The arguments have been made and Paul Nash, Partner at PWC, produced the numbers – SDLT from homes worth more than £1.5m fell to £749m in the nine months to November 2016 from £1.08Bn in the same period the previous year.
Over a year that would be a loss around £500m. Consider how many extra homes could be built with that money, possibly through an increase the Land Release Fund from £45m to ten times that amount? Time to act.”
Brendan Roberts, Director, Aylesford International
“The maximum rate of SDLT starts at £1.5m. The reality is that this only buys a fairly modest flat in prime central London. Many buyers at this level are leveraged to the extent that the SDLT makes a significant impact and has resulted in a marked slowdown in transaction volumes.
Wouldn’t it be sensible in Budget 2017 to review the rates and the levels at which the rates apply so that the increases in rates of SDLT is blended across a wider price range – say 12% at £5m plus, 10% at £2.5m plus, 7% at £1m plus etc. The Treasury have access to the Land Registry figures and could easily analyse the impact of the changes in SDLT on sales volumes.”
James Robinson, General Manager, Lurot Brand
“Without exception they sight our eye-watering property taxes as the reason for not moving. The sellers feel Stamp Duty is a purchase tax so not their problem and the buyers are refusing to pay the sellers price as well as the extra Stamp Duty.
And when we do get agreement we see sales fall through when the transaction costs are calculated. These run into many hundreds of thousands of pounds, occasionally millions, making the move financially unjustifiable and creating an impasse that has reduced transactions by 40% in just three short years. it is plain to see that the post Credit Crunch gains in turnover have not only been wiped out but have been driven down to a new nadir by this hyper taxation.
Back in 2013, it was broadly reported that Britain had the highest property taxes in the developed world and that was long before George Osbourne’s property tax blitz of 2015/16. PCL sales have fallen from 6288 in 2013 to a pitiful 3730 in 2016. This pales in significance when compared to the good old days of low property taxation, when in 2000 there were 11,243 sales.
The government boasts that they have squeezed our squeaking pips to the tune of a £7.7 billion record in Stamp Duty revenue in just the first eight months of this financial year. Considering 95% of all buyers paid less SDLT than before and that the rich are paying the vast majority, this appears to be an economic success and a vote winning master stroke.
In voting terms of course it is, however in 16 years of increasing taxation we have seen transactions fall by 67% which equates to 7513 people a year taxed out of moving. Tax revenue is up only because property values are up. When this is compared with what could have been raised with lower taxes it is a drop in the ocean.
The average property price in PCL is around £3,000,000 so the VAT alone on the estate agents fees for these lost transactions would be £112,695,000. Then consider the loss in taxes the estate agents, solicitors, surveyors, mortgage firms, removal companies, builders, photographers, floor-planners, and all the other ancillary services the property market supports, would have paid in company tax, P.A.Y.E. and National Insurance contributions. Then consider the economic growth we would have seen within our capital city and what the government could have done with the extra money generated.
Or, without being over simplistic, the Chancellor could cut these taxes by a third in Budget 2017 – transactions should triple, he would still receive the same SDLT revenue, plus all the other gains and everyone who wants to enjoy the human right and freedom of choice that comes with moving could do so.”