View more on these topics

Analysis: Stamp duty reform was long overdue

Smee-Paul-Headshot-700.jpg

The Autumn Statement finally brought much needed change to stamp duty after years of the CML and other organisations calling for it. But the swiftness of the move was a shock. To have a new system in place immediately, rather than a drawn-out consultation process, is jaw-dropping but still welcome. 

The old slab system was market-distorting and becoming more so as house price increases made a growing proportion liable for higher bands. This fiscal drag meant the duty totalled £1bn in July – the highest level on housing transactions since mid-2007, despite far fewer transactions taking place.

In the past year the Government has tried to increase demand through Help to Buy schemes but, in equal measure, the stamp duty system was stifling mobility. Our data shows, among mortgaged transactions over the past year, 21.6 per cent were for less than £125,000, 47.9 per cent for £125,001-£250,000, 29 per cent for £250,001-£925,000, 1.1 per cent for £925,001-£1.5m and 0.4 per cent for over £1.5m. The proportion of transactions that would pay more tax under the new system, if these figures stayed the same, appears as little as 1.5 per cent. 

The UK now has a far more progressive tax that is more in line with individual house prices and closer to the marginal system we have long advocated. There will be losers and winners in this but most mortgaged transactions will benefit from lower tax as a result of this move.

Reform of stamp duty was long overdue. Now we must wait and see how the market reacts. 

Recommended

Robert-Sinclair-700.jpg

Ami appoints Aileen Lees as senior policy adviser

The Association of Mortgage Intermediaries has appointed Aileen Lees as its new senior policy adviser. Lees joins the broker trade body from consumer website MoneySavingExpert.com, where she served as external affairs and campaigns officer for seven months between June and December 2014. Prior to this, Lees worked in the corporate pensions sector, most recently as […]

Cover

Slow ahead

While various factors are likely to play a part in stifling the lending boom this year – such as the general election and new stamp duty rates – experts predict modest lending and house price growth plus a smoother road for borrowers 

mole

The Mortgage Mole: Missing the point

Missing the point Over the years, Mole has had his fair share of laughs on the Mortgage Strategy news desk.  Every now and then, in between scurrying around the mortgage market hunting out the latest scoop, Mole has to – as all journalists do – browse through the odd press release. These can often be […]

Champion the small-scale developer

Traditional development finance must price in project and liquidity risk, but if your project is completed and you have begun selling units you could be eligible for cheaper funding, writes Matthew Tooth of Lendinvest. A product which prices purely for liquidity risk is one way to help developers lower their costs. This type of product allows […]

Newsletter

News and expert analysis straight to your inbox

Sign up