There’s no getting around the fact that buying a property is an expensive business. With legal fees, Land Registry costs as well as the price of using a removals firm all to be factored in, it all mounts up.
At least with these examples, buyers are actually getting something tangible for their money, whether it’s the services of a conveyancer or the transportation of their belongings from one place to another. But the same can’t be said of Stamp Duty, the obligatory tax that is charged on the majority of property purchases.
Under normal circumstances, a non-first time buyer purchasing a £250,000 home would have to pay £10,000 in Stamp Duty, a sizeable sum which many people feel would be better spent going towards a deposit. But, as most people are aware, since last year the imposition of Stamp Duty on purchases of up to £500,000 has been put on hold until the end of June 2021, after which it will be phased back in stages.
As many people predicted, and as Rishi Sunak hoped, the suspension of the tax has created a boom in house purchases, along with a rise in prices across the board. An influx of potential buyers began looking for the best deal and lenders saw a huge upturn in business. Meanwhile, online portals such as mortgage broker Trussle updated their existing libraries full of details on what buying a house entails. For example, it’s now possible to read all about how the pandemic has affected the process of securing a mortgage and purchasing a home on their site. With the increased momentum in the market, that’s the kind of thing more and more people are making use of.
The upshot is that the government’s move slowed down the already glacial pace of property conveyancing with some buyers now fearing that deals agreed in April will not have the chance to complete before the June deadline is upon them. As well as underlining a potential downside to the duty holiday, it has also opened up a wider debate about whether Stamp Duty should be abolished altogether.
The thinking behind this is that it’s a levy in which the burden is shared out unfairly and that it should be abolished and rolled into another form, which includes Council Tax. The campaign is being led by a pressure group called Fairer Share who claim that around 75% of households would be able to save money under their proposed system. Under this, the owners of a property would be charged 0.48% of the property’s value each year. So, working on the £250,000 average value of a home in the UK, this would mean a payment of £1,200 a year on a first home with a 0.96% charge on second homes. This would potentially be good news for renters too as the charge would be payable by property owners, not tenants (although a landlord would be likely to pass on at least some of the cost).
Already, the petition to at least debate this change in the tax has been signed by well over 100,000 people and hopes are high that the government may well take notice. After all, Boris Johnson is sure to want to leave behind a lasting legacy. And which Prime Minister wouldn’t want to go down in the history books as the person who finally abolished Stamp Duty?
But whether or not he’ll make it, only time will tell.