INDUSTRY REACTS: Chancellor Hunt reveals tax take from landlords and agents
Jeremy Hunt announced in his Autumn Statement that Stamp Duty would rise in April 2025, higher CGT bills for landlords and other measures that will affect agents.
Chancellor Jeremy Hunt (main picture) has promised to keep Stamp Duty cuts in place until the end of March 2025, but the tax will rise after that date.
“This will create incentives to support the housing market by boosting transactions,” he said.
The Chancellor said he would then “sunset” the cuts so that they are abolished but will be kept under review. He had previously said he would keep the Stamp Duty cuts but had not set a deadline for them.
Former Chancellor Kwasi Kwarteng’s mini-budget announced cuts to Stamp Duty with nothing to be paid for the first £250,000 of a property’s value – double the previous amount allowed. The threshold for first-time buyers was also increased from £300,000 to £425,000.
Mortgage rates
Hunt also told MPs as he announced his Autumn Statement that he planned to keep mortgage rates down and ensure they are “significant lower”. He said that rates were higher in the United States, Canada and New Zealand.
Top rate taxpayers will face higher bills after the threshold for the 45p rate was lowered from £150,000 to £125,140. Capital gains tax exemption amounts will be reduced from £12,300 to £3,000 by April 2024.
Other announcements include changing the threshold for the top rate of income tax from £150,000 to £125,000 and freezing allowances and thresholds for income tax, national insurance and inheritance tax until April 2028.
Industry reaction
Ben Beadle, Chief Executive of the National Residential Landlords Association, says: “The demand for private rented housing is massively outstripping supply. This will only worsen as growing mortgage rates make home ownership more difficult to afford.
“The Government has yet again failed to recognise the potential for housing to drive growth and deliver for the economy. The Chancellor should have focused on boosting supply by ending the Stamp Duty Levy on the purchase of new rental homes.
Lucian Cook, head of research at Savills, says: “Time-limiting the previous change to stamp duty thresholds will offset some of the pressures on housing transactions over the short term, particularly as the deadline for change approaches in March 2025.
“But while we should never underestimate the ability of stamp duty measures to distort the market, this time around the higher costs of debt will undoubtedly constrain that effect. At the same time a return to old thresholds from April 2025, will be a disappointment to home buyers in London and the South East. ”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “As with all these financial statements, sometimes it’s as much what the Chancellor doesn’t say as what he does, with the full implications becoming apparent at a later date.
“On the face of it, the Chancellor appears to have done very little to compromise the property market and number of transactions, which is good news. Of course, there will be less money in people’s pockets when it comes to buying property and worries about rising interest rates will remain.”
Rightmove’s property expert Tim Bannister says: “The clock now ticking on potential stamp duty savings will bring a bit more urgency for people trying to get on the ladder or trade up in the next few years.
“As it’s still in place for a couple of years we don’t foresee a significant number of people bringing their plans forward to 2023, especially due to current affordability challenges, but we may see a jump in new sellers towards the end of next year and into 2024 to ensure they can move in time.
“The total time it takes to buy and sell a property is currently around six months, meaning people will need to be well on their way by late summer 2024.”
Dominic Agace, chief executive of leading estate agents Winkworth, says: “The change to CGT is yet another negative move by successive Chancellors against buy to let landlords, many of whom are already leaving the sector due to increased taxation, regulation and rising interest rates.
“This is an own goal by the Government as the private rental sector is the only place many people can find a home if they are not in a position to buy. With the lack of social housing supply and the need for young professionals to be highly mobile and able to move to London and other major cities, the role of the private landlord is more important than ever and should be encouraged.”
David Alexander, CEO of DJ Alexander Scotland, says: “The reduction in Stamp Duty Land Tax (SDLT) announced by Kwasi Kwarteng has been maintained but will now be time limited to 31 March 2025 with the aim of supporting the housing sector through the next few years as higher base rates impact on affordability and the expected reduction in values.
“This is welcome and must be replicated in Scotland if we are not to develop a two-tier property market. The Scottish sector will look increasingly expensive to enter without mirroring this valuable reduction in purchase costs and I would urge John Swinney to make a similar announcement in next month’s Scottish budget.”
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Nathan Emerson, CEO of Propertymark, says: “Our member agents say the raised Stamp Duty threshold has had a positive effect on the confidence of their buyers and sellers, so we’re naturally disappointed it will be phased out by 2025.
“Stamp Duty is not only a barrier to entry to the property market, it restricts downsizers from releasing much needed family homes for second steppers. Bands that better represent house price growth and affordability are key to keeping the market moving.”
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Steve Wayne, founder of Benjamin Stephens, says: “We are still seeing a steady flow of exchanges and completion despite these challenging times. People who have agreed to sales over the last 6 months are rushing to get them through to completion in time. We have also seen a rise in cash buyers and it’s definitely still a strong buyers’ market.
“We are seeing a busy rental market with available properties barely making it onto the portals before they are getting snapped up, another sign that this is the right time to be a landlord.
“Political and economic factors do affect the market but only temporarily. Ultimately the housing market will continue despite all of these factors because people will always need to move. Births, deaths, marriages and divorce keep the housing marketing moving.”
Pic: BBC News
