Stamp duty rise could hit sales
A SUBSTANTIAL rise in stamp duty in next weeks budget could have serious implications for the property market by slowing down the volume traded.
One of the many rumours emerging from the City suggests the Chancellor might raise this tax – now at 1% – to as much as 7% for purchases above a certain threshold value.
"We need a mobile labour force to move where the jobs are," says Peter Caroe, Knight Frank. "A 7% leap in stamp duty could bring the property market to a halt as the added cost of moving generates a reluctance in the market-place".
But a 1% rise would probably be swallowed up in a fall in house prices until the market readjusts to compensate for the extra purchase cost.
Also Mr Caroe says such a move could render some deals under negotiation uncontractable with buyers unable to afford the property previously in their price range.
"If such a measure was introduced, buyers should also be able to renegotiate a deal to take account of the rise in stamp duty," he says.
The effect on the market depends on the threshold level – £200,000 is a suggested figure – maintains Mark McAndrew, Strutt & Parker, which could affect the amount a buyer is prepared to pay for a property.
Barry Saint, managing director AMC says: "The agricultural property market is likely to be affected more by changes to capital taxes including inheritance and capital gains than even a 6% increase in stamp duty. "Who can forecast the price of a farm or bare land to within even 10-15%? It is not an exact science." *