Comment: the Spring Budget won’t address our stamp duty problems
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Stamp of disapproval: why agents’ pleas for mercy from Philip Hammond will fall on deaf ears
It is with certain trepidation that I write about the Spring Budget and Stamp Duty Land Tax (SDLT).
Forecasting has always been something of a dark art and journalists have hardly covered ourselves in prediction glory in the past 18 months. In fact, we’ve often been wildly out of touch and completely off base. See my stand-in column in print last year when I resolutely refused to believe on a Tuesday that I’d be writing to a future Thursday where Donald Trump was President.
In the business of property, as in predictions, estate agents regularly bemoan their lack of a crystal ball. Being able to predict the market and the machination of politicians would give an irresistible edge.
Even George Osborne would have been hard pressed to predict how eviscerating yet effective his SDLT changes would be at cooling the London property market.
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The former Chancellor’s 12 per cent tax on property purchases over £1.5 million has hit the north London property market disproportionately hard.
Sales slowed to a panting crawl over summer as the stagnation at the top end of the market has choked off supply to buyers further down the ladder. Families and professionals can’t trade up and affordable homes for first time buyers remain few and far between. Trickle down economics indeed.
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Meanwhile those wealthy enough to have once considered multi million pound property purchases can simply spend the same amount on luxury rentals as they would on SDLT as they wait out the current political and market uncertainty.
Whilst there are early signs sales are picking up as spring comes to London, estate agents are deeply shaken and are openly pleading with the government to repeal their property tax laws.
“Mr Hammond, Sir, a multiplicity of businesses and property owners are suffering from the ineptitude of your predecessor,” pleaded Glentree director Trevor Abrahmsohn, hopefully suggesting the Chancellor reduce the rate by 3 per cent.
Even the online estate agents are feeling the pinch. “This Government is a Conservative Government and should be promoting aspiration rather than penalising it,” argued CEO of eMoove Russell Quirk argued, highlighting that £1.5 million in London nowadays is hardly oligarch territory and its families who struggle.
There are rumours Mr Hammond might raise the threshold of £125,000 to get more first time buyers on the ladder, but you’d be hard pressed to find a couple of derelict garages for that money around here.
Therein lies the rub. London’s prime property market is seen as the preserve of the most elite of the metropolitan elite, a microclimate controlled bubble within the bubble that sits in a half dome over everything encircled by the M25.
Estate agents and London property owners sitting on multimillion pound homes are hardly a sympathetic cause.
A tax that squeezes them until their eyes pop plays well to the galleries of Brexit-voting Britain that our UKIP-vote chasing Conservative party is actively courting.
Is throwing its capital city’s property market under the bus a sensible economic decision?
Hardly, but this is a government prepared to play fast and loose with the economy to please those who believed the illogical promise emblazoned on the side of the bus in the first place.
I don’t see Mr Hammond budging on the 12 per cent tax in his Spring Budget or beyond, but then again, I have been wrong before.