New property tax on the horizon?
Have you heard about the proposed new property tax… which could replace stamp duty in the next Autumn budget…?
Does this mean a big shake-up for property owners?
The Treasury has a passion for change & it is rumoured they are considering radical plans to scrap stamp duty & replace it with an annual property tax on homes worth over £500,000.
The proposals being muted could mean:
• 0.54% yearly tax on the value above £500k - £2,700 PA on a home worth £500,000 & £3,780 PA on a house worth £700,000 etc.
• 0.81% yearly tax on the portion above £1m - £8,100 PA on a home worth £1,000,000 & £16,200 PA on a home worth £2,000,000 etc.
• Still paying the 5% surcharge if it’s a second home
Unlike stamp duty, which is a one-off hit, this would be an ongoing annual bill — potentially thousands of pounds a year for many families. It is not believed is it going to be retrospective, so will only affect new buyers/movers after introduction.
Some say it would make housing more affordable for first-time buyers. Others argue it could punish long-term homeowners & shrink the market.
Let’s just say early reactions are mixed…
In an article in The Times, Professor Tim Leunig from the London School of Economics, who came up with the proposals last August, said: “The way Britain taxes households is both impractical and unfair. Stamp duty raises transaction costs, preventing people from moving for new job opportunities, and undermines growth.”
What’s your perspective? Would you prefer a one-off stamp duty… or an annual tax on your property?
London and the South East – including our fair county of Norfolk – are likely to be one of the worst hit regions if the property tax is introduced, due to the relatively high value of property.
One thing seems likely, the current trend for holiday & second homes coming to the market seems likely, as does a continuation of the pricing cool down over here.
And potentially properties sitting at the £350,000 to £450,000 mark might start getting snapped up by canny buyers, to do up – ready to sell to those wishing to downsize, should the property tax move be introduced.
One think seems certain – change is on the horizon.
And as Mark Twain said, “I’m all for progress; it’s change I don’t like.”