Stamp Duty rise ‘will have little impact’
Stamp Duty has risen to 5% for residential properties valued at more than £1m from today, but the increase will not seriously affect the housing market, experts have said.
According to mortgage brokerage First Action Finance, the change will affect just 1% of housing transactions.
In addition to the new 5% Stamp Duty rate, the government has pledged to clampdown on avoidance of the tax by buyers of high value properties.
Jonathan Cornell, communications director for First Action Finance, said that the Stamp Duty change is a “political move” rather than one to help the financial sector.
He said: “I can’t see Stamp Duty doing anything other than raise money for the government and, however much it does raise, it will still only be a relatively small amount.”
Yet, Mark Alexander, managing director at the Money Centre, said that the the 5% rate will create a pinch point in the market where buyers begin to see more properties priced at just under £1m.
He added: “At the same time, if there is a lot of demand for property than the seller is going to be in a good position and less likely to want to reduce the price.
“But overall, I think the Stamp Duty hike will have minimal impact on homebuyers, particularly in London and the South East.”
Email Mortgages chief executive Michael White added that that the change will not impact the £1m-plus property market significantly through 2011.
He said: “I don’t think Stamp Duty will make much difference now because there is a shortage of quality supply to meet pent-up demand.
“For people buying at that level it isn’t much more than the price of a new kitchen.”