While there is agreement that changes have to happen in the property market, you’ll struggle to find suggestions approved by a majority, which is perfectly understandable. A solution targeting one aspect of the market is pleasing for people unaffected by change and derided by people who are.
In the long-term, a significant change to stamp duty would affect the entire market. Immediately, there will be winners and losers from such a change, but the market will likely settle and balance matters.
There have been noises about the Government’s desire to make a significant change to the stamp duty system. Rather than the buyer paying stamp duty, the responsibility falls on the seller.
Stamp duty changes have been common of late
There have been many alterations to stamp duty in recent times. First-time buyers have benefitted from the removal of tax for homes costing less than £300,000 and a reduction in duty for other homes. Landlords, property investors and people developing a property portfolio have been forced to pay additional stamp duty.
Individuals have prospered from these changes, but in terms of the overall impact on the market, no one would claim that much has changed.
Many support the removal of stamp duty for buyers
There is an argument for removing stamp duty from buyers. By lowering up-front costs associated with buying property, people could be encouraged to move on. This movement could stimulate the market, but you can easily argue against this suggestion by looking at the impact on the other side of the transaction.
If stamp duty is imposed on vendors, making selling a home more expensive, many households will decide against moving home. If this happens, the supply of dwellings falls again, which slows down the market, and makes homes more expensive.
You could also argue that if vendors know they’re forced to pay stamp duty, they’ll raise house prices to account for this increased payment. In this scenario, the buyer is still bearing the brunt of the additional cost. However, spreading the cost across the value of their mortgage payments, as opposed to being paid upfront changes things. For some buyers, this is an acceptable outcome; for others, it is unpalatable.
Forcing vendors to pay stamp duty isn’t the only suggested change in the market. One example that is growing in popularity is the removal of stamp duty for downsizers. This group accounts for 7% of the property market, but advocates of this switch suggest it would free up properties, facilitating more significant movement and creating opportunities for buyers.
No one solution will please everyone, and it is unlikely that one solution has the power to turn things around in the UK property market. There needs to be a string of actions and changes. There also needs to be better guidance for buyers and vendors, making sure people have access to what they need to help them make an informed decision.
No matter what move you wish to make in the property or rental market, Thomas Morris is here to support you. For a chat or discussion on your options, contact your local Thomas Morris branch, and we’ll be delighted to offer guidance. If you are looking to sell your home, book a valuation at a time that is suitable to you.