With just a month to go until the March Budget, Prime Minister Boris Johnson’s promises to consider cutting the top rate of stamp duty from 12 per cent to seven per cent made during his leadership campaign are still ringing in the ears of some buyers.
Ian Gray, senior partner at Kinnison Property Finance, said: “I’ve had lots of different clients in the £2m to £5m bracket saying to me, ‘I am buying this house but I won’t exchange until after the Budget’. There’s a school of thought that stamp duty will be revamped. They are interested in the property, but they plan to drag the purchase out until after 11 March.”
Gray does not share their optimism but he says buyers are remaining hopeful, despite the proposal being dropped from the Conservative’s election manifesto.
Several other brokerages have reported similar conversations with their high net worth clients.
Aaron Strutt, director, Trinity Financial, said some of the firm’s clients had asked to hold back their completion date. He added: “Now that stamp duty is so expensive, particularly for those paying the enhanced rate, lots of buyers are keen to wait in case they can save money.”
Alexander Smith, senior adviser Capricorn Private Clients, said reluctance in buyers to complete before the 11 March Budget was not confined to the £2m to £5m bracket.
“We are seeing this attitude across the board,” he said. “They are looking at the budget to see if there is going to be any more flex on stamp duty. At the same time, we are seeing international buyers keen to get purchases done, in case the government introduces any new taxes that will penalise them.”
Government has ‘zero incentive’ to cut rates
Not everyone is holding back though. Matthew Hillyer, associate director, said although his clients had asked about stamp duty changes, none were delaying their purchases to wait for the chancellor’s Budget.
“My response to clients who have asked about stamp duty cuts, has been that it is highly unlikely. A government who is taking a big economic hit from Brexit is not going to be giving out any tax breaks on what is a very good income generator for them.
“If house sales were slowing down solely due to the level of stamp duty people have to pay then the government may consider reducing the tax. But all the evidence we are seeing since the start of this year is that it was the fear of a Labour government and possible property and wealth taxes that was actually stopping people buying in the prime space.”
He added that the housing market has accelerated since the start of the year despite the current level of stamp duty, giving the government zero incentive to cut rates.
A stamp duty change that may make it into the Budget, following its appearance in the Conservative election manifesto, is a three per cent surcharge on non-UK resident buyers.
Peter Izard, business development manager, Investec Private Bank, said: “I don’t see stamp duty changes for high net worth borrowers in the Budget. Our eyes will be firmly focused on potential changes for foreign buyers. It has been mooted in the past, but we will receive greater clarification in the Budget.”