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There is a general murmur and some anticipation that there may be some changes to UK Stamp Duty in Philip Hammond’s first Spring Budget. Mr Hammond took over as Chancellor of the Exchequer from George Osborne in July 2016.
However, we should really take any rumours with a pinch of salt as they generally stem from people wanting and trying to push for specific changes. Also, there is speculation from the media to possibly drum up more interest in what the budget may contain.
Possible Stamp Duty Changes
Minimum Threshold
One of the possible changes that have been postulated is that the minimum threshold for paying stamp duty will be increased from the current level of £125,000. This may help first time buyers who are already struggling to find enough cash to cover the extras that are part of a property purchase. These seems like the most likely change as the minimum threshold has not been changed for 10 years and more and more first time buyers are having to pay stamp duty as house prices increase.
Sellers Liable
Another possible change (which seems very unlikely in our view but has been proposed by the Yorkshire Building Society for one), is that sellers should be liable for the stamp duty instead of buyers. This would be quite a big change for the industry that would require a major overhaul of procedures for various professionals and the Land Registry. This change would also help first time buyers but obviously there would be a general feeling of unfairness if people currently in their own homes ended up having to pay stamp duty not only when they bought the property but then subsequently when they sold it.
Downsizing
A further suggestion is that those who are downsizing should not be liable for stamp duty so that this would encourage in particular older people to free up bigger family homes and move into smaller accommodation. Although this may help those moving up the chain, this may actually put a higher burden on first time buyer style homes.
Extra Stamp Duty
One more possibility is that there could be changes to the new 3% extra stamp duty that is now payable for those buying 2nd homes, or even abolition of this stamp duty payment. We also think that this is unlikely, not only because the extra payment has only just been introduced, but also because it has proved, to an extent, to be working for the government for the purpose it was introduced.
In terms of number of property transactions, in the 4th quarter of 2015 the total number of property transactions according to the HMRC was 234,800. In the 4th quarter it was 233,900 with 62,800 of those being subject to the extra 3% stamp duty. Therefore the government has the extra income available from these transactions for investing in new homes, in particular in areas where there are high levels of second home ownership.
Budget 2017
So the Chancellor is due to deliver his budget on March 8th and we will see then if any changes are made to the current stamp duty regime. We will obviously keep you posted here on any changes that are announced.