After years of “will they, won’t they?” rumours and much lobbying from the property industry, finally we have something to talk about as far as stamp duty is concerned.
This afternoon (3 December) during a pretty relaxed and assured speech, with a couple of gags thrown in at the expense of the opposition of course, the chancellor characteristically saved his “white rabbit” for the end and announced a complete overhaul of a tax he described as “one of our worst designed and most damaging of all taxes”.
So out goes the much criticised and outdated slab system which caused bunching and distortions in the market, making way for a more progressive system which has always seemed much more sensible.
This works in much the same way as income tax so buyers will now only pay the rates proportionate to that banding rather than on the whole amount. In essence, this means that many buyers will from midnight tonight, yes it comes in quick, suddenly have some more cash in their pocket.
For example someone purchasing at £550,000 will now pay £17,500 rather than £22,000, cash which can be used elsewhere.
The kicker, however, is for those looking to purchase at higher levels. So someone purchasing at £1.5m for example, will now pay £93,750 rather than £75,000, which will undoubtedly hit those in London and the South East harder.
Of course, it could be argued that by hiking the percentage charged on high-end properties this is a much more preferable option than the much-derided Mansion Tax, proposed by Labour, moving it to a purchase tax rather than an ownership tax. This now makes it politically difficult for the opposition to introduce a Mansion Tax as there could be a question of double charging.
As ever, the key will be what effect this has on the housing market as a whole, hopefully encouraging people to move or buy for the first time with the extra saving. While those at the top end may be left cursing once again, for many this will be a welcome boon to those looking to purchase in the future.