The reforms to stamp duty will have an effect on the housing market, Financial Secretary to the Treasury David Gauke has admitted.
He was speaking at the first reading of the Stamp Duty Land Tax Bill in the House of Commons on Thursday 4 December.
Announced in the Autumn Statement last week, the changes to stamp duty will mean homebuyers will no longer have to pay tax at a single rate on the entire property price.
Instead, they will pay the rate of tax on the part of the property price falling within each tax band, similarly to how income tax works.
Mr Gauke said: “As I have said, our reforms will change the amount of SDLT due for the majority of homes, leading to a cut in the cost of moving home in the vast majority of cases.
“That will have a small impact on house prices overall, although the size of that effect is expected to be lower than the usual fluctuations in the housing market caused by many factors that occur year on year.
“I am not denying that there will be an effect, but there are many factors that come into play when it comes to house prices.”
During the debate Labour MP Shabana Mahmood questioned why the changes would not apply to commercial property, claiming this was electioneering on the Government’s part.
In response Mr Gauke said the market for non-residential property is different and there is not the same urgent need for change.
The bill was given its first reading and will have its second reading in the House of Commons this week.
Adviser view
Simon Mansell, founder of Worcester-based Temple Bar Financial Advice, said: “I think we have got to be cautious about political gestures this close to the election.
“The London region operates by different rules to the provinces and measures that may benefit the capital may not help the wider population.”
