An article from the Daily Mail online has reported that wealthy buyers have been left in a confused state after a series of changes to rules on stamp duty. Knight Frank, an estate agent, has recorded that there has been a ”sense of uncertainty” from both buyers and sellers, and just as we are about to go into the new year, there has been a climate of caution from both sides.
As mentioned in previous articles, in his Autumn statement, the Chancellor George Osborne announced plans to make Buy-to-Let landlords and second homeowners pay a 3% surcharge. This came after changes to the stamp duty system last year, which means that for anyone buying a property worth more than £937,000 now pays more in tax. These measures were brought about to confront the increasing number of wealthy people purchasing second homes – properties that may otherwise have been snapped up by cash-strapped first-time buyers who are already struggling to get on the property ladder, the article continues. Evidence produced by the estate agent mentioned earlier suggests the measures are having an impact already, with reports that the number of sales earlier this month completed in the most exclusive parts of the capital are a fifth down from last year.
Knight Frank continues to state that prices were beginning to adjust to the higher stamp duty rates on more expensive homes. It claimed: ”Higher transactional costs at the top end of the market are increasingly being factored into pricing. The prime central London market remains fragile and price sensitive,” it added. ”Buyer caution is related to high transactional costs and decisions are increasingly taken on a longer-term basis, producing a flight to quality for the best property and addresses.”
The estate agent also went on to state that the price sensitivity was reflected in the number of homes being recalled from sale, which has gone up by 12% between the months of April and November of this year, compared to the same period last year. It made a prediction that housing prices will rise by 3% in 2016.
Many experts have said the changes to stamp duty were welcome to the housing market, and it will not be all doom and gloom as some suggest. But the never-ending increases in housing prices have not seem to be affected by the changes, and the prediction made by Knight Frank may very well become reality as the new year dawns on us.