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As the press media would have us believe, apart from tinkering with VAT, it looks as though Mr Sunak is going to raise the threshold of Stamp Duty as a limp gesture, for a year, to get the residential property market off its knees.<\/p>\n
I\u2019m wondering who is, today, advising the Treasury about the state of the residential market? Whoever they may be, the truth is that as a direct result of the government-backed scheme – Right-to-Buy \u2013 this has been stoking up the lower end of the market, for some time now. Frankly, activity in this sector has been quite brisk and doesn\u2019t really need any further stimulation.<\/p>\n
The \u2018brick-like constipation\u2019 is actually in the market above \u00a3 3million, particularly in the capital, although also elsewhere in the provinces. Activity in this sector is down by 70% and values down by 40%, in the pre Covid-19 era and since then, even worse<\/p>\n
As any financial wizard will tell you, cutting most taxes usually costs the Exchequer money initially, until it hopefully comes back by way of indirect taxation i.e. VAT, by the stimulation of retail spending which has been in the doldrums of late.<\/p>\n
Stamp Duty is one of the few taxes which bring instant results and he should have the \u2018cojones\u2019 to lower the rates from 12%\/15% to, say, 7%\/9%.<\/p>\n
This will immediately stoke-up the marketplace, which will not only help all the battle-weary businesses associated with this sector i.e solicitors, surveyors, valuers, estate agents but also do much good for the retail sector i.e white goods\/brown goods, which will, on its own, generate a great deal of tax revenue, even without the drop in VAT.<\/p>\n
I believe that there could be between \u00a3 5billion and \u00a3 10billion of latent money ready to find its way straight into the coffers of the Treasury and lord knows what other receipts could be enjoyed by this \u2018one stroke of the pen\u2019.<\/p>\n
The hapless former Chancellor, Osborne, was not aware of the unintended consequences of his Stamp Duty tax reforms in 2014, but this has dropped the Stamp Duty take by 40% from \u00a3 12.5billion to \u00a3 7.5billiion this year and this is at least 61% down from the OBR forecast issued for SDLT tax revenue in 2020, at the time.<\/p>\n
With the Chancellor unleashing the sluice gates of spending to counteract the harmful effects of Covid-19 now approaching \u00a3 300billion, this welcome windfall would be \u2018a breath of fresh air\u2019, to raise much-needed money, at this difficult time.<\/p>\n
Although this was a political \u2018hot potato\u2019 at one point, which the Tories were terrified to do anything about for fear that they would highlight the errors of the last administration, it could be the only instant effect that is within the Chancellor\u2019s grasp, today.<\/p>\n
Rumours were swirling that SDLT in its entirety, would be given a holiday for a year. Still, as an estate agent, I think this would be thoroughly imprudent and would cause an unfortunate spike in values, which would further affect the plight of the vulnerable and the homeless, today.<\/p>\n
Oddly enough, the market between \u00a3 1million and \u00a3 3million, in the last 3 weeks has become very active indeed.\u00a0Still, there is minimal movement above \u00a3 8million to \u00a3 10million, not assisted by the travel and quarantine chicane, making it difficult for the much-needed international market to find its way to the UK.<\/p>\n
Mr Sunak, be bold and courageous, shrug off all your inhibitions and create a win-win for everyone in this troubled residential housing sector.<\/p>\n
We all welcome the fast-track initiatives to bypass the planning restrictions announced by the government last week, but if you want to breathe life again into the property sector, the aforementioned measures are much needed and not a moment too soon.<\/p>\n
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