Stamp duty reform ‘boosts house sales’
ESTATE agents say the housing market could be set for a bumper year following cuts in stamp duty tax.
The overhaul of the duty announced in Chancellor George Osborne’s Autumn Statement boosted the number of home buyers keen to move to their highest December level in a decade, figures show.
The tax shake-up means that someone buying a family home with a typical price tag of £275,000 will save £4,500.
The National Association of Estate Agents yesterday said nearly a fifth of members had seen a rise in sales of properties worth between £251,000 and £925,000, while one in nine reported an uplift in sales of homes with a value up to £250,000.
The NAEA says that on average 360 house hunters per branch were registered in December – the highest number in the final month of the year since 2004.
Stamp duty now operates in a similar way to income tax, applying as a percentage of the exact price paid at rates which vary above set thresholds.
Previously, it had been imposed on the total value of the property, so someone buying a home for between £250,000 and £500,000 paid between £7,500 and £15,000.
Under the new system, instead of paying tax at a single rate on the entire property price, buyers only pay tax on the part of the property price that falls within each stamp duty tax band.
This has resulted in a reduction in the duty for 98 per cent of home buyers.
It would seem prospective home buyers have been left feeling encouraged, while agents have also reported activity in the middle price mark picking up
The tipping point, where the tax starts to become more expensive than it was before, comes only when homes are worth upwards of £937,500.
Mark Hayward, managing director of the NAEA, said: “Reforms to stamp duty was one change that we predicted would influence the market this year.
“And from our latest housing market survey it seems that we are starting to see the initial impact.”
He added: “December is typically quieter.
“However it would seem prospective home buyers have been left feeling encouraged, while agents have also reported activity in the middle price mark picking up.”
The supply of homes for sale remains tight, with the number available per NAEA branch just 45 on average, down from 50 the previous month and 47 in December, 2013.
Lack of supply saw members record just five sales per branch on average in December compared with eight the previous month.
