The Stamp Duty reforms that were set out last year detailed the changes for buying a home or property with a certain price tag and paying for the tax that applied to that certain price tag. The former structure of the stamp duty meant that there were certain price brackets that determined how much tax you were meant to pay. For an example, if a property, however, was less than £125,000, you were exempt from paying tax on the property. Now, this structure seemed all well and good, perhaps for those who had planned how they were to budget when it came to buying a home or going into the buy to let scheme, but the thresholds in which people had to stick to had meant that there were vast distinctions in how tax was applied. Experts claimed that this would short-change buyers and confuse the housing market. However, the changes that took place in December 2014 got rid of this system in favour of a system that had tax applied like income tax.
This more than likely spelled good news for most households, with 98% spending less than £950,000 on a property. And over the coming months since its introduction, property estate agents documented an increase in visits in a decade. Within the first month of its coming into force, December had a peak average of 360 visits per branch; a record not reached since December 2004. Does this mean that the changes were a success?
Well, these are still early days, and there is more research to be conducted. Initial reports do suggest that these changes are supporting those who want to buy for the first time. However, the Office for National Statistics have stated that in the past between the 1980s and 1990s, 1 in 3 16-24 year old persons were able to buy their own first home, compared to 1 in 10 today. So those of us who want to move away from our parents may need to save up a bit more to do so.
There was another question asked by sceptics of the reform though; would this new version of stamp duty push up housing prices? Well, so far, there has been little evidence to suggest that this has taken place. It has been now 8 moths since it came into play, and there is little data conveying that prices of homes have dramatically risen. This means, then, that the Chancellor has been successful in bringing about these sweeping changes to the stamp duty. But, as was mentioned earlier, these are still early days.
Some saw this change as a boost for the Tories in the electoral campaign back in May of this year. Even if it was seen as a deal maker, it seems to have worked. It has been welcomed with open arms to all who believed the former system was confusing and outdated. No matter how it is seen, the new changes brought with the stamp duty may help the economy in the long run.