Head of Research Nicola Almond previews the Spring Budget and CEO Anne Currell voices support for stamp duty reform.
Next Wednesday’s spring budget will be Philip Hammond’s first and the UK’s last, as it will move to the autumn from this year.
Bumper tax receipts in January from self-assessment and capital gains tax have cut government borrowing to its lowest level in January for 17 years, giving the chancellor more room for manoeuvre than expected. There may be some modest giveaways, although these are likely to be limited as there is still much uncertainty around Brexit, with article 50 expected to be triggered around the 15th March.
The most likely move in the property sector is some mitigation of the impact of rising business rates. Business secretary Sajid Javid has already promised help worth ‘hundreds of millions’ for the many small businesses affected, many of which are facing rises in the region of 400%.
Lobbying continues to increase for reform of stamp duty, although the absence of any announcement in the Autumn Statement suggests this may be falling on deaf ears despite disappointing tax receipts following last April’s SDLT increases for buyers of additional properties. By November, these changes had brought in half as much money as the Treasury expected and were blamed for the steep fall in property sales volumes, costing the UK economy an estimated £1 billion.
With almost half of all SDLT raised in London and the South East, where just over a quarter of the population live, this tax falls disproportionately on areas with higher property prices. It represents not only a barrier to entry into the property market, but also an obstacle to those wishing or needing to move. Currell supports Property Week’s call to reform the SDLT system, which comprises five key demands:
1. Exempt first-time buyers from stamp duty
2. Exempt downsizers or give them a tax break to move home
3. Adjust the tax brackets to increase funding for affordable homes
4. Lower the top rates
5. Abolish the 3% surcharge on additional homes
CEO Anne Currell believes that if enacted, these bold moves would provide a welcome stimulus to the property market, commenting that
“Stamp duty reform has the potential to provide a much-needed boost to supply as well as improving affordability across the sector, especially for first time buyers in London”.