{"id":21667,"date":"2019-02-28T12:04:33","date_gmt":"2019-02-28T11:04:33","guid":{"rendered":"http:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=21667"},"modified":"2020-07-15T11:19:53","modified_gmt":"2020-07-15T10:19:53","slug":"housing-market-halted-by-stamp-duty-changes","status":"publish","type":"page","link":"https:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=21667","title":{"rendered":"Housing market halted by stamp duty changes"},"content":{"rendered":"\r\n<figure class=\"wp-block-image\"><\/figure>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-21766\" src=\"http:\/\/www.propertysurveying.co.uk\/newsletter\/wp-content\/uploads\/New-houses-1.jpg\" alt=\"New houses housing market stamp duty\" width=\"1200\" height=\"283\" srcset=\"https:\/\/www.propertysurveying.co.uk\/newsletter\/wp-content\/uploads\/New-houses-1.jpg 1200w, https:\/\/www.propertysurveying.co.uk\/newsletter\/wp-content\/uploads\/New-houses-1-300x71.jpg 300w, https:\/\/www.propertysurveying.co.uk\/newsletter\/wp-content\/uploads\/New-houses-1-768x181.jpg 768w, https:\/\/www.propertysurveying.co.uk\/newsletter\/wp-content\/uploads\/New-houses-1-1024x241.jpg 1024w\" sizes=\"auto, (max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 1362px) 62vw, 840px\" \/><\/p>\r\n<h5><strong>How has the SDLT rate hike affected the property market?<\/strong><\/h5>\r\n<p>An Inflation Report from the Bank of England says that recent increases in Stamp Duty Land Tax (SDLT) have effectively \u00e2\u20ac\u02dcput the brakes\u00e2\u20ac\u2122 on house sales by deterring house moves because of the additional costs.<\/p>\r\n<p>The changes did have the desired effect of restricting the second home market (link to other articles) which meant more properties becoming available for first time buyers to buy, by freeing up homes that would otherwise have been rented out by a landlord purchaser.<\/p>\r\n<p>However, while deterring landlords, owners of more expensive properties are now reluctant to move because of the additional tax costs and the property market has been restricted. The knock-on effect down the chain means that potential buyers of cheaper properties are suffering from a shortage of starter homes.<\/p>\r\n<h5><strong>London<\/strong><\/h5>\r\n<p><a href=\"https:\/\/www.gov.uk\/government\/collections\/stamp-duties-statistics\">Land Registry<\/a> figures show that London&#8217;s annual SDLT receipts between 2008\/09 and 2015\/16 grew by 227%, by 140% in the South East and\u00c2\u00a0124% in the East of England. Other English regions had between 48% and 86% growth during the same\u00c2\u00a0period.\u00c2\u00a0In 2015-16, residential properties in London accounted for 46.7% of SDLT revenue. The value of SDLT receipts in London increased by \u00c2\u00a3340 million (11.2%) on the previous year and it was the only English region to see an increase. In the same period, non-residential London property accounted for 42.8% revenue.<\/p>\r\n<p>The London property market has been disproportionately affected by the SDLT rate increases, with fewer Land Registry transactions since the 2016 change.\u00c2\u00a0General consensus is that where London leads, the rest of the country will follow. The gloomy outlook predicted by members of the Royal Institution of Chartered Surveyors (RICS) is that there is a risk of greater falling sales volumes than at any time since records began in 1998.<\/p>\r\n<p>The Bank of England said that the London market had been &#8216;affected by regulatory and tax changes, and also by lower net migration from the EU.&#8217;<\/p>\r\n<p>Investment by wealthy professional migrants has historically been a key driver of London\u00e2\u20ac\u2122s property market.<\/p>\r\n<p>The Inflation Report said that &#8216;London house price inflation was also materially above income growth between 2014 and early 2016, reducing affordability. The slowdown in house price inflation has been more modest in other parts of the UK so far, although surveys such as the RICS suggest a fairly widespread deterioration in market sentiment.&#8217;<\/p>\r\n<p>The average UK property is worth \u00c2\u00a3230,630 currently, while the typical London home is worth \u00c2\u00a3472,901.<\/p>\r\n<p>While consumer confidence in the housing market had already begun to flounder before the Brexit vote, it is thought that the changes in SDLT began the process.<\/p>\r\n<p>Experts have said that the housing market had already taken a turn for the worse before Britain voted to leave the EU. They argue that Mr Osborne\u00e2\u20ac\u2122s tinkering was the main cause of the slowdown.<\/p>\r\n<p>The contrast between resilient consumer spending and a subdued housing market in recent years could be because the latter reflects market\u00e2\u20ac\u2018specific issues, such as affordability. It could also be because lower confidence in the general economic situation is relatively more important for large, hard\u00e2\u20ac\u2018to\u00e2\u20ac\u2018reverse purchases than for day\u00e2\u20ac\u2018to\u00e2\u20ac\u2018day expenditure.<\/p>\r\n<h5>What is Stamp Duty?<\/h5>\r\n<p>Stamp Duty was initially introduced to the UK in June 1694, when it was used to pay for the war against France. The levy was so successful in raising additional money that it became a permanent tax.<\/p>\r\n<p>Stamp Duty Land Tax (SDLT), as we now know it, came into effect with the Finance Act 2003 and replaced the previous system. SDLT applies to all English and Northern Irish property purchases of houses, flats, other buildings and land in the UK from the low water mark. Scotland replaced stamp duty with the Land and Buildings Transaction Tax (LBTT) and Wales replaced it with Land Transaction Tax (LTT). The tax is similar in Scotland and Wales to SDLT, but there are different taxation thresholds.<\/p>\r\n<h5><strong>How much is SDLT?<\/strong><\/h5>\r\n<p>Homebuyers in England have been put off purchasing more expensive properties by the rises in SDLT since December 2014.<\/p>\r\n<p>The rise increased the tax for anyone buying a main residence property worth over \u00c2\u00a3925,000 to 10%, and properties worth over \u00c2\u00a31.5 million to 12%. The duty rose again in April 2016, when a flat 3% surcharge was added to the SDLT rate for second home purchases valued at \u00c2\u00a340,000 or higher.<\/p>\r\n<p>So, if you sell your main residence and replace it with a new main residence home for \u00c2\u00a3300,000, you will pay: 0% on the first \u00c2\u00a3125,000, 2% on the band \u00c2\u00a3125,000 to \u00c2\u00a3250,000 and 5% on the remainder, equating to a total of <strong>\u00c2\u00a35,000 in stamp duty land tax<\/strong>.<\/p>\r\n<p>However, if the property you are buying for \u00c2\u00a3300,000 is not your main residence, you will pay: 3% on the first \u00c2\u00a3125,000, 5% on the band \u00c2\u00a3125,000 to \u00c2\u00a3250,000 and 8% on the remainder, equating to a total of <strong>\u00c2\u00a314,000 in stamp duty land tax<\/strong>.<\/p>\r\n<p>Ask a Chartered Surveyor to provide you with a building survey when buying property. Whether you&#8217;re buying new or older property, a Chartered Surveyor will overlook the condition and structural elements of the building to help you safeguard your investment.<\/p>\r\n<p><a href=\"http:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=21651\">Back to March 2019 Newsletter<\/a><\/p>\r\n<p>\u00c2\u00a9\u00c2\u00a0<a href=\"http:\/\/www.propertysurveying.co.uk\/INDEX\/INDEX1.html\">www.PropertySurveying.co.uk<\/a><\/p>\r\n<p>SH\/LCB<\/p>\r\n\r\n<p>&nbsp;<\/p>\r\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":2,"featured_media":0,"parent":22331,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"folder":[562,557],"class_list":["post-21667","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Housing market halted by stamp duty changes | Property 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