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Brokers shrug off Johnson’s latest potential stamp duty reform ‒ analysis

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  • 18/07/2019
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Intermediaries are underwhelmed by suggestions that Boris Johnson is open to drastic changes to the stamp duty set up should he end up in Number 10, warning that there may be unintended negative consequences for first-time buyers.

 

It has been suggested this week that Boris Johnson, the front-runner in the ongoing Conservative Party leadership contest, is considering revamping stamp duty should he become Prime Minister.

The Association of Accounting Technicians said it had met with Johnson to discuss the idea of switching the tax so that it is paid by vendors rather than buyers, with Johnson reportedly open to the suggestion.

Phil Hall, head of public policy and public affairs at the trade body, said that such a change would save the taxpayer £700m a year by rendering the relief currently enjoyed by first-time buyers redundant, and argued that it was “much more progressive” as it would be paid on the lower priced property being sold rather than the higher priced property being bought.

 

Giving landlords a boost

Stuart Powell, managing director of Ocean Mortgages, suggested this was simply “headline catching” prior to the leadership vote, noting that it was an idea that has been mooted for years.

He added: “It will be interesting to see how it affects the second home purchase market. If stamp duty is not paid on the second purchase any more, this could adversely affect the first-time buyers as landlords purchase the properties they are buying, one of the key sectors it is due to help.”

However, while Powell was sceptical about how likely it was to happen, he noted that if it sparked a real debate about stamp duty and how it can be reformed for the better, then that is welcome.

 

Bad news for downsizers

Mark Harris, chief executive of SPF Private Clients, warned that it was highly unlikely that the probable next prime minister would actually go through with such a change to stamp duty, though noted there would be a benefit for buyers as they would then have a larger deposit to play with.

He continued: “That said, if the vendor is also buying their next home, they will have a smaller deposit. It would be good for those who continue to trade up and of course first-time buyers, but bad news for those trading down.”

 

The problem isn’t with the process

Mark Snape, managing director at Broker Conveyancing, argued that the current system “seems to work” and that any issues with stamp duty are not around the process, but the level at which it is charged.

He continued: “I sense any stamp duty change will be more focused on dropping the current rates it is charged at – we’ve already been told Johnson wants to cut stamp duty for all those buying property under a value of £500,000 and will drop the percentage rate on the most expensive properties. 

“Any further, and much more fundamental change, is in my view still likely to be some time away.”

 

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