Housing market in a ‘parlous state’: No more new taxes, plea to Chancellor

Chancellor Philip Hammond is being warned that the property market is “in a parlous state”.

He has been told that any further property taxes could harm the Government’s already dwindling Stamp Duty takings.

The plea comes as the Government plans to introduce an additional Stamp Duty levy of 1% on non-resident purchases, with a consultation due in the New Year.

But property investment firm London Central Portfolio (LCP) has warned that analysis of HMRC’s third quarter Stamp Duty receipts shows liable transactions fell 4% annually to 290,740, down 8.7% on three years ago.

Tax receipts were also down 8.2% annually, to £2.39bn.

Naomi Heaton, chief executive of LCP, said: “The fall is undoubtedly due to investors withdrawing from the market until they can see some light at the end of the Brexit tunnel.

“The toxic political climate and stagnating prices have brought ever-growing uncertainty to the residential market following several years of increased taxation.

“With the housing market in such a parlous state, it would seem somewhat imprudent for a sitting Chancellor to raise further taxes on the residential sector.

“However, this is exactly what Hammond has done, proposing an additional levy of 1% on non-resident purchases in the most recent Budget.

“The international buyer, of course, is politically a very easy whipping boy. The reality, however, is that for many new-build developments in the UK’s most prominent cities, where price points are unaffordable for the domestic market, these investors represent a significant proportion of buyers.

“HMRC Stamp Duty statistics do not paint a rosy picture of the UK housing market, with neither the buyer nor the Exchequer winning out.

“Until the Government has a clear road map for Brexit we are unlikely to see increasing transactions and therefore increased revenues.

“While it is highly unlikely that the Government will repeal any of their recent tax increases, it certainly does not seem to be the time to implement more.”

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6 Comments

  1. The_Maluka

    Mr Hammond would do well to look at the Hong Kong, the taxation system is generally considered to be simple, transparent and straightforward among jurisdictions in the world.

    “Simple, transparent, straightforward”, can any of these adjectives be used to describe the British taxation regime?

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  2. Jacqueline Emmerson

    I have no objection to overseas investors paying greater tax to buy and maintain properties, it is like any other form of investment. If properties are too expensive for those overseas investors then they will stop buying them, sellers will have to reduce their prices, the market will find its level and hopefully this will mean that families will be able to buy. Otherwise the exodus of hardworking families from London will continue. Many of those people still work in London thus end up travelling for miles everyday and missing out on family life.

     

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    1. James Wilson

      Exactly right.  The point about “we need foreign investors because prices are too high for Brits” was hilarious.   We should limit foreign buying so prices fall to levels which are affordable to people who actually live and pay taxes in this country.  

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  3. James Wilson

    The changes to SDLT were always intended to be a cut in Stamp Duty.  So why is an estate agent complaining when the amount taken in SDLT is reduced?   That is like a tax CUT for UK property right?   The real reason people like LCP are struggling is nothing to do with SDLT.  It is because everyone can see that London prices are going to fall significantly further before they rise.   And, probably more importantly, it is now much harder for foreign money launderers to use London property to cleanse their money.  I imagine that that is what is really hurting the likes of LCP.   And that tightening up hasn’t happened a moment too soon.  And please do me a favour on the terminology:   a Russian oligarch buying up a row of houses in Eaton Square is NOT “investment”.   Absolutely nothing is created, no new jobs, no business.  The only effects are spiralling property prices which mean that Londoners can’t afford to live in London.  Utterly socially useless and if this “investment” fell to zero the 99.99% of Londoners who aren’t estate agents would cheer to the rafters.

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  4. PeeBee

    In 39 years of working in the property industry I think I can recall a period of around seventeen microseconds when it was not in “a parlous state”.

    Just don’t ask me to confirm when that was, please.  I haven’t got that good a memory…

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  5. calledit

    Ridiculous opinion piece – if something is getting built in a city it should meet the market not get help  to obtain an artificially high price whether lower taxation or through help  to buy.   How much help does the new build market need?

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