Several of yesterday’s announcements were highly significant, but will probably only have impacts at the upper end of the market on the way properties are financed.
– New 7% “Stamp Duty” band above £2m
- This may stall imminent transactions, but have little effect on reducing longer term volumes as over £2m buyers are generally more “price elastic” – with more accessible assets such as cash, so although prices may be bargained down initially, with potentially some delays to moves, it will probably not have much of an impact on the Hampshire market where the average number of properties over £2m at any one time is less than 250.
- New instructions are likely to be priced either just below the threshold or significantly above to minimize the effect.
- Hampshire could well, as an indirect result of the new band level see a rise in the number of people moving out of London to the country to enable them to get the house they need for less than £2m and spend a little more on their commute!
– 15% company stamp duty and possible annual tax on property purchased through a company used for personal use
- This at first sight is a very high barrier and likely to impact the London market more than the Hampshire property market. But investors may simply change their portfolio strategy to retain fewer expensive and more sub-2m properties with the possibility again of moving out of London to the country.
– Other impacts seem more “neutral” – reduced high rate tax from 50% to 45%, improved initial personal tax-free allowances, freezing of age-related allowances, removal of child benefit and so on are likely to have little change on the first property hunters, their ability or willingness to purchase at the lower and mid-end where incomes are already squeezed. Only time will tell and we shall watch the Spring markets to see where the wind is blowing.