What the Budget has delivered for the property market
19 MARCH 2014
Paul Frost of buying agency Prime Purchase, says: 'Mansion tax is the measure that many homeowners are really panicking about and a Conservative Chancellor was never going to drop that bombshell in this Budget. However, it is telling that the level at which those buying property via a corporate envelope will have to pay 15 per stamp duty has fallen from £2m to £500,000, not long after the higher level was introduced. There are fears that such a tax creep would be similarly applied to mansion tax were it to be introduced, so that while it may initially hit what you might consider rich people owning a £2m home, before long it would drip down so that those earning a £1.5m or £1m home would be affected. Clearly there is precedence here and that will worry many people.
'Will the reduction in purchase prices from £2m to £500,000 have any impact? It might put off a buyer from Paris who wanted to purchase a one-off pied a terre in the middle of London via a corporate envelope but many will simply buy in their own name instead. It will be interesting to see whether overseas investors will be deterred from snapping up several flats at around £650,000 a pop in say Battersea Power Station but in such an instance many of these would be rented out anyway. Also, how will this be policed - will these flats need to be let all the time? What about void periods and when does a void period become an unreasonable length of time? It could turn into a logistical nightmare for the Government.
'The Chancellor missed an opportunity in not reforming stamp duty as it completely skews the market. It should be removed entirely for first-time buyers as it's an unwelcome extra to find when you are buying a home, trying to get a deposit together and don't have much spare cash. However, there may be accusations that this would be inflationary and push up prices, with the money that would normally have gone towards stamp duty being put towards the purchase price instead.'