Stamp duty legislation change …

[ohpoowhatnow]

With the new ‘leaked’ news that Rachel reeves has plans to abolish stamp duty and move towards a property value tax, would you hold off moving ?

Our house has literally just gone on the market and we haven't found a house yet …. But the removal of stamp duty would save us approximately 25k. Do you think this will be announced in the autumn budget? And if so how long would it take for the legislation to go through ?

Thing is that if the make changes that will cost you money then they usually give a few months notice to allow transactions currently in the pipeline to complete, because they know that people may not have thousands extra in the budget to meet the new obligations; but changes that reduce obligations they put it straight away so not to cause people to wait.

I think she'd be better off to get cracking now. If the changes are beneficial then she is ahead of the game. If the changes are negative then she should have a few months leyway and her headstart should mean she can complete before the changes come into force.

Nothing has been confirmed yet so no one knows what taxes Labour may increase or change. It's seems almost certain that they will increase some though but they may also try to cut spending again, after two failed attempts.
I agree that imposing CGT overnight would freeze the market so they would need to do it more gradually or increase the annual tax on the land or property or revalue council tax, which could be done using AI. At the very least, council tax needs re-banding.

They don't have to actually revalue the council tax at all though.

They could say for example everyone over Band D pays an additional 5% on top of the council tax they currently pay to central government.

That is cash straight into the government without any revaluing of CT necessary and without any delay. You would probably want to add a line item in the bills, but since the bills are broken down for this sort of stuff in terms of where your CT actually goes I doubt whether it would be that complex to add a new one.

Where did you get this information? That’s not what’s proposed.

That’s just clearly going to stall the housing market.

I don’t think it will for younger people. They won’t have to find the lump sum to pay Stamp
In will, however, in the long term cost them more
and
It won't raise the immediate cash Labour need
Loss of PRR will however have a severe effect on the market

As will any further increases over and above the norm on council taxes. If the division in £££ across bands widen ( higher bands far in excess of lower bands ) anyone looking at long term yearly costs of moving up a band will, quite rightly, be cautious.
Some are already paying in excess of £4k and the highest band in my area is £4715.
( A new 3bed in our area was put into band G, no idea why )

The proposal to scrap stamp duty has been very poorly communicated and is very thin on detail. Tim Leung, an advisor working on this, explained on Jeremy Vine how he sees it working. Once the policy comes in, it will be triggered by a house being sold. Thereafter the owner of the house will pay an annual levy eg 0.5% of the value, so 3k on a 600k house, but they will not have paid stamp duty. If you paid stamp duty for your house you don’t pay the annual levy. It’s either or. He didn’t say anything about the seller paying. It’s intended to free up the housing market, so if you move every five years with your job you just keep paying the annual levy for the house you currently own. It means people can downsize and pay a smaller levy without being hit by stamp duty. Stamp duty avoidance stops older people downsizing. No mention of if or when it will actually be implemented.

This is exactly my understanding and I don’t think it’s a bad idea. Particularly for families who may struggle to find the lump sum stamp needed

The issue though is that it has been noted it could take 17 years before the Govn sees any financial benefit.

So I wonder if this policy will be used more as a teaser to then increase taxes elsewhere.

They'll F it up if it's what they suggest. It'd probably start a civil war between North and South if they use a £500K cliff edge. Stupid on all levels.

I'm just so relieved that Andrea got her £800K Hove purchase completed in time to avoid the new annual charges. Perhaps that will be the cut off?

I’ll be really pissed off if they add a value tax or up council taxes considering I spent over £70k in stamp duty last year.

welcome to the world of being caught by tax changes, I had to pay inheritance tax on an estate worth just over 250k. You'd get £1m tax free nowadays.

The world is full of winners and losers, with the former mostly being politicians dancing to the tune of their fat cat mates or in their pocket union barons.

The whole point of the changes will be to increase tax take. For owners, buyers and sellers. Things are really bad financially and there is a heap of untaxed equity that will have to be milked unfortunately 😢

Or the
many other ways to save of raise money.

If all they’ve got is taxing home ownership
they’re in trouble

I voted for them. Have done all my life. But they are seriously taking the piss with many things right now.

Out of interest, what do you think are the many other ways they can save or raise money?
They did try to save a tiny amount of money with the cuts to WFA and benefits but there was so much screaming and complaining from the general public and the Labour Party that those cuts were shelved.
What do you suggest the tax or cut?

It's unlikely to be anything that works well, judging by the general competence of governments in the UK!
I can't see why an additional tax, triggered by a property sale would be a good idea. It may well put some people off moving, although it would also tend to reduce the sale price of properties at the higher end.
They could introduce a new banding for properties across the whole country at the same time if they wanted to. I wonder if they will try to introduce some kind of CGT on all the equity, but perhaps not triggered by sale.

You're right. A tax on purchase or sale is nuts. It has unintended consequences and adds unnecessary friction to the housing market, stopping people from making the right moves for themselves such as job relocation and downsizing.

My preferred solution is scrapping SDLT and Council Tax and replacing it with an annual Home Value Tax and Poll Tax. The phrase PT always stirs up a frenzy because people assume that it would be the same as Thatcher's PT. It wouldn't. It would be levied at a much lower rate but would reflect the fact that every adult enjoys local services.

As ever, it'd be for the government to determine the exact rates and any allowances.

I would much rather pay a stamp duty lump sum than some inflation adjusted amount in perpetuity. Much cheaper and more freedom that way. I think the idea of property tax is an absolute disaster

I agree that an annual home value tax would be fairer, reflecting current values. I guess the problem with that is that it could be increased a lot. I've always been against the poll tax model because it would penalise the poorest. At least a property tax would be tied to wealth, although you could then argue that those with no mortgage should pay more than those with a mortgage!
I wonder if the government may try to impose some additional CGT on death as well as IHT. Who knows what may happen!

There isn't more freedom given that it deters many people moving for work or freeing up family homes.

The HVT (in my mind) would increase (or decrease) in line with house prices. The beauty is that you would no longer cap multi-million pound homes currently paying a stupidly low amount of council tax. If implemented correctly you'd collect the tax from all owners including foreign and company - they can't hide the homes offshore. It would have a wonderfully moderating impact on house prices which would benefit our children.

Combine this with a proper social house building program.

That would be the hope, to improve fairness, reduce the price of family homes and encourage people to move as they need. The social housing program doesn't seem to be happening, sadly.

Oh wise ones, tell me in words of few syllables and uncomplicated sentences (I just don't have the kind of brain that grasps money stuff), I'm completing soon on a 420k house. So current stamp duty will be (I think) 11.5 k.
Should we delay completing until after the budget? If it benefits us it'll benefit our vendors too, who are also buying at under 500k. I know it's not guaranteed to happen but delay just in case it does, am I right?
Thanks for your help.

I would carry on with your purchase. Who knows what the gov will actually do? I'd hope that if they adopted my preferred approach that they would include some tapering allowance for people who had paid SDLT in the previous 5 or 10 years.

I think the plan is to scrap stamp duty completely and replace it with an annual levy on homes worth over £500,000. I'm less clear as to when you pay this levy, at point of sale or whether it is an ongoing annual charge. So for sales under £500,000 no tax will be payable.
But there is no guarantee this will happen.

For the higher value homes I've heard that if you've paid stamp duty already then you won't pay the levy, but surely that will mean people just won't move. I've also heard that exemption will only go back ten years. Houses valued around the £500,000 mark will also lose value as nobody will want to buy a house knowing they'll pay a levy on it.

We have a house that's worth probably around the 510/525 mark and are hoping to buy a cheaper house to pay off some debts. I suspect that if the proposals are brought in we'll have to sell our home for less but on the plus side pay no stamp duty. But who knows what's going to happen to be honest!

I think we'll hold back for now, but if I was mid purchase I'd just get on with it. If you love the house you're buying why risk it? None of this may actually come into effect.