|New Stamp Duty Rules 'Could Stall' Chiswick Property Market|
Autumn Statement announcement will have major local impact, say agents
The new 'tiered' stamp duty rules will see winners and losers in Chiswick, but local estate agents warned that it is likely to see a rise in 'buyer bargaining' over the next few months at the higher end of the market.
The changes could see vendors in Chiswick offering to pay a proportion of the duty to encourage sales on houses valued at over £1 million, according to a local estate agent, who said the new duty is a 'game changer' for the property market. The average price of a property in Chiswick was over £1 million according to the latest Land Registry figures.
Another agent commented that, as Chiswick is within the top 2% of property values, it will not fare so well under the new rules. The changes are likely to benefit those purchasing apartments and smaller properties.
According to Alastair Hilton of Winkworth, the big change will be for local properties worth over £1.5 million.
He said, "In the rest of the country, these properties are few and far between, but in London, and Chiswick, they are certainly not uncommon. A home worth, for example, £1.75 million would have cost a buyer £87,500 but will now cost £111,250 in stamp duty. A not inconsiderable increase.
"My prediction is that we will see more homes in the £1.5 million and over bracket, where the vendor offers to pay a proportion of the stamp duty for the purchaser in order to entice them into a purchase. These buyers will be reticent to pay such an increase. There has been much talk of the Mansion Tax is recent months, but after this budget announcement, the Mansion Tax is now dead in the water. In its place is a radical revision of the stamp duty system. It was announced that the revision to the stamp duty thresholds would make 98% of buyers better off. But that certainly isn’t the case for London buyers."
Christian Harper of Harper Finn said he was concerned that it could be the catalyst that could cause the market to stall, at what is a traditionally quiet time of year.
"Today's announcement regarding stamp duty was designed to restructure the ‘fairness’ of stamp duty for the UK are a whole. As Chiswick is within the top 2% of property values, we don’t ‘fair' so well! Within 45 minutes of the announcement we received a revised offer from a buyer who simply doesn't have the extra £30k that they will now have to pay. On the brighter side eleven of our current buyers will now have to pay less after midnight tonight."
Under the new system, effective from midnight tonight you now pay the increasing percentage only on the portion of the value over each threshold.
This means that an apartment in Chiswick worth for example, £600,000, would now attract a Stamp Duty charge of £20,000. With the previous system, a buyer would have paid £24,000. In fact, buyers of any properties worth up to £925,000 will be better off.
However, a home worth, for example, £1.75 million would have cost a buyer £87,500 but will now cost £111,250 in Stamp Duty.
Source: Harper Finn
Alastair Hilton said,"There were many properties that were around the previous thresholds where the prices were held back by the increase in duty at each threshold. Some of these properties may well now rise in value. Vendors with properties over £1 million and certainly ones over £1.5 million will now see increased pressure from buyers to negotiate on the price.
"My prediction is that we will see more homes in the £1.5 million and over bracket, where the vendor offers to pay a proportion of the stamp duty for the purchaser in order to entice them into a purchase. These buyers will be reticent to pay such an increase".
Christian Harper said,"I consider the Chiswick market to be fairly stable currently with a slight lean towards fragile. I am somewhat concerned that this may be the catalyst that could cause the market to stall, especially as it’s happened at a seasonally quieter time of year. Will Q1 2015 come out strong or are buyers going to struggle to meet seller's expectations in term of available cashflow, now that the average price of Chiswick property falls into the increased stamp duty arena.
"Clearly its good news for the majority of buyers across the UK - however I think that Chiswick property owners need to take professional advice from established estate agents as to how to overcome the obvious 'buyer bargaining’ that we will encounter over the next months".
Labour's parliamentary candidate in the forthcoming election, Ruth Cadbury commented:
"With measures on Stamp Duty, the Chancellor has accepted the principle of Labour’s argument that very high value properties are under taxed. Labour will support these measures. But we also need a Mansion tax to help save and transform our NHS."
December 5, 2014