Measures announced to battle tax avoidance included a 15% Stamp Duty Land Tax rate on properties sold within a corporate envelope.

But what did the industry think?

Stamp Duty

Richard Sexton, director of e.surv chartered surveyors, said:

It won’t be a policy that hits the housing market with any real force. It is a way to raise revenue from property without rocking the foundations of the market.

An extra £40,000 of Stamp Duty tax is an annoying inconvenience for wealthier buyers, rather than a serious repellent. The effect on the overall housing market will be nominal given how few people the tax effects.

Less than 1% of all house purchase approvals in 2011 were for properties worth over £2m, so the effects are unlikely to be widely felt and won’t feed down into the lower echelons of the housing market. And the suggestion it will make skilled workers and wealthy think twice about moving to London seem farcical given these groups will be paying 5% less in income tax.

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David Brown, commercial director of LSL Property Services, said:

The Chancellor has plumped for Stamp Duty as his favoured means of generating revenue to pay for cuts in income tax and this puts a heavy burden on the property sector.

Both the bottom and top ends of the market will be subdued by the increases in Stamp Duty and this is likely to cause activity to ease down in these parts of the market. George Osborne clearly feels the number of cash buyers for properties at the higher end – especially prime properties in London which have driven price growth in the capital over the last year – means buyers have enough ready funds to support Stamp Duty at 7%.

The proof will come in the next few months, but with growing barriers to entry, this decision will give the foreign investors who are driving forward the market for prime property pause for thought as they look to property as a way of protecting their assets rather than increasing their tax exposure.

David Whittaker, managing director of Mortgages For Business, said:

As proposals go, this will do as much for the property market as the guillotine did for the pockets of Marie Antoinette’s wig maker. But the government seems intent on delivering populist measures rather than supporting one of the most crucial elements of the economy, so we shouldn’t be surprised. Apart from the fact this move won’t make the Treasury anywhere near the amount of money they expect or need, it will send shockwaves through the rest of the sales market.

The prime level of the market has been one of the few parts of the sector functioning well but this hike threatens to sap its energy. All it will do is leave buyers in the middle of the ladder sandwiched between the feeble first-time buyer market and a punished prime market. Not a situation we should intentionally be in when the market is in middle of a lacklustre recovery.”

Tax avoidance

Jonathan Samuels, CEO, Dragonfly Property Finance, said:

Closing down loopholes is fair enough but the 15% rate on homes over £2m bought through a company could cause extensive collateral damage. Many genuine investors and developers invest in the UK property market via corporate entities. Taxing them at 15% is going to send them running, which will hit the UK property market hard.

Few will shed tears over this new tax hitting prices at the higher end of the market, which may well happen, especially in prime Central London. But if developers start re-routing their funds away from the UK, the broader property market will suffer. The intention via this tax is to target tax dodgers. The outcome, if we’re not careful, could be quite different.

Hugh Wade-Jones, Director of Enness Private Clients, said:

The very idea that Stamp Duty loop holes will be closed for good is pure fantasy as you only have to read what the government is proposing to realise it doesn’t grasp the finer workings of the more complex schemes being used.

With property prices nigh on doubling every decade for as long as the current generation can remember, people forget that measures aimed at the wealthy now will eventually affect far more than the ‘super-rich’. With this set of measures the government appears to be saying that it’s okay to do well but make sure you don’t do too well as we intend to penalise you for success.

David Salusbury, chairman, National Landlords Association (NLA), said:

Regrettably, there has been no recognition in the budget statement of the barriers to investment presented by the current system of property taxation. While the NLA believes the government is justified in closing the Stamp Duty loophole to prevent tax avoidance, the Treasury should not ignore the impact these measures will have on legitimate companies which buy property to let as their primary business activity.

This is likely to adversely influence investment decisions made by landlords who operate as small businesses and provide much needed housing. The NLA will seek discussions with the Treasury to see whether it is possible to differentiate genuine property businesses from companies set up purely for tax-avoidance.

Top rate of tax

Russell Quirk, director of the estate agents eMoov.co.uk, said:

Much of the pain of the new top rate will be felt by wealthy foreign buyers, who can’t vote in Britain. At a stroke Mr Osborne is trying to sugarcoat the abolition of the 50p income tax rate and give a nod towards Lib Dem calls for a “mansion tax”. But such crude attempts to placate opponents, or even coalition partners, rarely make for good policy.

With such a huge disparity in property prices across the UK, it will inevitably turn into a tax on London and the South East. It may be a clever wheeze to mitigate the political fallout from the abolition of the 50p tax rate. But ultimately this ill-thought-out measure is just another tax on aspiration, and a levy on success.

FTB Stamp Duty

Nicholas Leeming, business development director at Zoopla.co.uk, said:

As a proportion of GDP, the UK already has the highest property taxes in the world. But Stamp Duty for first-time buyers, in revenue terms, is the fiscal equivalent of a mosquito on a rhino’s back.

Given the importance of first-time buyers in providing the first link in the property chain, the government should be doing everything possible not to deter these buyers and allow them to energise the rest of the market. This will lead to a higher levels of activity further up the property ladder and, in turn, higher tax revenues to bolster the Treasury’s coffers.

However, it appears that the government is focusing on a short-term strategy and while initiatives such as the NewBuy scheme are intended to compensate, in reality this will only help a small number of buyers and do little to assist the property market as a whole.

NewBuy

Brian Murphy, head of lending at Mortgage Advice Bureau, said:

It was good to hear Chancellor George Osborne’s pledge to support the housing market by reiterating the government is committed to using its balance sheet to underpin the NewBuy scheme. With right-to-buy invigorated too it is promising news for those eying up the bottom rung of the housing ladder, and this will benefit the whole market.

The promise of extra funding to help construction firms building new homes will work alongside the NewBuy scheme and will benefit not just first-time buyers.