Will we remember the 5th December?
If I can only ask for one thing from George Osborne’s Autumn Statement on 5th December – it would be some clarity.
The market is still reeling from the effects of the Budget back in March – when half-baked and ill-conceived legislation was announced which appeared to have been thrashed out in the small hours the night before.
The £2m+ Stamp Duty Land Tax implemented in April has hit the high end of the property market disproportionately hard and 7% stamp duty threshold has become a much used excuse for not improving offers on houses which would have previously sold for up to £2.2m. Improving a £2m offer by as little as a pound now costs the buyer £40k – which is total madness in a free market economy.
Under the current legislation, a buyer pays £154,000 on a £2.2 million property – a very bitter pill to swallow when this is paid from post-tax savings which have already been charged at 50%. This change to the law was badly thought-out and is far too simplistic. I am an advocate for charging stepped or graduated Stamp Duty Land Tax which seems much fairer.
Looking forward to 5th December, exemptions and climb downs are now expected from the 15% non natural persons Stamp Duty Land Tax – and developers, funds and property companies are expected to be omitted, providing they have been trading for over 2 years.
But there is growing speculation that houses valued at £2m+ will be subject to an additional rate of council tax. Given that the number of high value sales of £10m+ has halved since the previous Budget – another increase would have a very negative impact on sales volume and as a result on tax receipts. Significant additional tax burdens on the wealthy can actually have a negative impact on tax revenue; indeed the French Treasury must already be counting the cost of the emigrating UHNW citizens, many of them to London.
The budget deficit needs to be addressed and should be the Coalition’s priority, but implementing a more ‘laissez-faire’ approach is surely more likely to help ease the current malaise in the homes market.. After all, transaction volume is still down 40% since 2007 and this will only exacerbate the problem.
Implementation of these unclear and complicated tax measures could also prove to be problematic and ultimately unenforceable. What we really need now is some transparency.