As we drag ourselves into the year 2016 from all the festive cheer over the Christmas break what does the Residential Property Market have in store for us?
The Chancellor’s ill thought out Tax changes concerning Stamp Duty have now served to polarise the Residential Market (certainly in the Capital) whereby in the sector up to £700,000 the market is booming and, in contrast to this, properties from £2million upwards are struggling and even more so as you go up the financial scale.
The net effect of this is that the first time buyer, at the lower end, is further disenfranchised and the majority will have to keep renting since they cannot muster the resources for a deposit for the purchase of a home despite the limited assistance of the Help-to-Buy scheme.
Paradoxically, despite the draconian rises in Stamp Duty rates receipts for The Treasury are down by approximately 12%. These higher taxes have caused activity at the higher range of residential property to drop by between 25%-50% and due to the pre-Election ‘give-away’ Stamp Duty rates at the lower end have been reduced. I’m not sure whether this was the resultant effect of The Chancellor had envisaged.
Now the new changes for Buy-to-Let investors will ‘choke off’ demand and, understandably, I am wondering who is the beneficiary for all of these changes?
I think the government now understand what is meant by the ‘law of unintended consequences’.
First time buyers are upset, Buy-to-Let investors are ‘groaning’, there are fewer foreign buyers than ever before, Tax Receipts for The Treasury are down and it appears that there are no winners here and that we are in the ‘worst of all worlds’.
From the gloomy Christmas retail trading results, the recent gyrations of the Capital Markets and the general slow down in economic activity throughout the world I wonder if we are all slowly grinding to a halt when we were doing very nicely beforehand.
Economists invariably warn us about the ‘perils of government intervention’ in markets whereby, despite the laudable intent, the remedy is ‘worse than the curse’.
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UK Property Taxes: Worst In The World