George Osborne’s headline-grabbing announcement in his Autumn Statement, to overhaul Stamp Duty with immediate effect, will be an unexpected early Christmas present for a large number of buyers.
The changes mean that anyone buying a home for between £125,000 and £937,500 will pay less tax than would have been the case prior to the statement and in some cases the savings are significant.
For example, someone buying a home worth £265,000 in November would have paid £7950 but now they will pay £3250 – a saving of £4700.
The changes are likely to boost activity in the first three months of 2015 ahead of the Land and Buildings Transaction Tax (LBTT), which will replace Stamp Duty in Scotland from April.
Following the SNP’s announcement that they were scrapping Stamp Duty in favour of the LBTT, there was already an incentive for anyone buying a home for more than £324,300 to make their purchase sooner rather than later. Following last week’s changes, everyone buying a home in Scotland for £255,000 or more will pay less tax if they move before April meaning there will be even more people looking to bring forward their move.
The likelihood is that we’ll see a number of sellers trying to take advantage of this projected upturn in demand by getting their home on the market sooner than they otherwise would have.
We have seen evidence of this in recent weeks. During the second half of November properties of £324,300 or more accounted for 20 per cent of new market listings compared to 15 per cent the previous month.
While the new Stamp Duty bandings introduced by the UK government are lower than those predicted to be put in place by LBTT, the difference in savings is not so extreme that buyers would consider buying a home in England. Buyers pay a premium to live in cities such as Edinburgh and Aberdeen and this will remain the case.
Ultimately, it’s unlikely that last week’s changes will lead to any new transactions. The months leading up to April will be busier than they otherwise would have been with a corresponding drop-off in activity immediately thereafter before buyer activity returns to normal in the second half of 2015.
• David Marshall is business development manager of ESPC