What on earth is everyone going on about? True, the market is extremely buoyant between £200,000 and £600,000 where there is little stock and where you can sell a property to whomever you want within a matter of hours. However, at the middle to upper end of the market, there is a recession going on which probably started a year ago and where values are dropping by 10-15%.
There are very few buyers, particularly above £10million, either locally or from abroad. The Non-Dom fiscal changes, the draconian Stamp Duty rates and the low oil price have all seen to that.
Whilst nobody is going to ‘cry’ for this sector, please bear in mind that markets are intrinsically linked and there is a percolating up and cascading down process all through the price ranges. If the top end is struggling it will soon work its way down until the whole property market suffers and then we are all in trouble.
The Stamp Duty ‘giveaway’ at the lower end, and eye-watering levels at the higher end, have caused this disparity and the government is getting less receipts from SDLT so it’s a lose-lose for them and ourselves alike.
Analysts from institutional agents have been so spectacularly wrong in their predictions for market growth over the last few years and are now turning instead to talking about the growth over the next five years that we all know is a meaningless prediction that everyone ignores. It’s a bit like a meteorologist telling us there the weather will be for the next five years.
Our esteemed Chancellor has a golden opportunity in the Autumn Statement of 2015 to correct this error and reduce Stamp Duty from 12%, at the higher end, to say 8% and this will trigger many more transactions and raise more Tax by doing so. In the alternative, if reducing Stamp Duty at this level is too much to bear politically speaking, then make the sellers and buyers split the 12% Tax between them and then the pain/gain will be shared equally.
Potential buyers, for instance, looking at a 12% Tax wall (15% when you take estate agents and solicitors fees into consideration) which you need to ‘climb’ to move home is just too much to contemplate which is why there is so much activity in refurbishing and extending existing properties today.
Come on George, ‘wake up and smell the coffee’ and do the right thing … you know it’s good for you (and us)!
Written by Trevor Abrahmsohn.
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