Will Boris Johnson Lower Stamp Duty on £1m+ Properties
Updated: Aug 31, 2019
Jeremy McGivern of Mercury Homesearch shares his insights.
Stamp Duty is one of the most disliked taxes that we have.
Especially since the tax rate was ramped up dramatically by George Osborne in 2014. So, Boris Johnson’s recent suggestion, that he would abolish SDLT for first time buyers and dramatically reduce the rate of SDLT on £1m+ properties, has caused a little excitement.
But as a buyer you don’t want SDLT to be reduced.
This may sound counterintuitive, as it would seem to make sense to reduce your purchase costs. But actually, reducing SDLT would make it more expensive to buy a property for the very simple reason that prices would spike higher almost immediately and by more than the reduction in the SDLT, because this would engender more confidence in the market.
It really is that simple. Any reduction would be seen as the government trying to stimulate the market and we would see an immediate spike. Indeed, the same thing happened in reverse when SDLT was increased – prices dropped by more than the SDLT increase.
And what of Johnson’s other suggestion – that sellers should pay the cost of SDLT? Again, prices will simply rise to compensate for this – psychologically buyers will have less objection in paying a higher sum for a property itself rather than having to write a separate cheque to our beloved friends at HMRC for Stamp Duty.
Again, this psychology will men prices will increase by more than the SDLT increases (although in the very short term there is likely to be a shortage of new property on the market as people get to grips with the changes).
But, the proposed changes are a good thing if you are thinking of buying, because you want to take action while most other people are sitting on the side lines, watching. There is no shortage of money waiting to jump into the London property market. People just want more certainty. But certainty is an illusion.
If you don’t believe me, in 2007 conventional wisdom was certain that prices only went up and I was ridiculed for suggesting that prices would crash (I first predicted that prices would crash in 2007-8 back in 2005 – the property cycle is predictable). Indeed, the prevailing sentiment was that prices only went up and that if you didn’t buy then, then you would be priced out of the market.
Likewise, if you had suggested buying property in London in 2001 then everyone would have told you that you were mad (as I was for founding Mercury Homesearch that year), but prices boomed higher for 6 years…
So, although now seems like a scary time to buy what with Brexit, the trade war with China, etc., this is exactly what makes it such a good time to buy. It is not the end of the world. Are any of these events worse than the dotcom crash in 2000, the recession of 2001 or the horrifying events of 9/11?
Does this mean you should rush out to your nearest estate agent and start buying property? Of course not. You must be highly selective. As research by Savills showed:
Between 2005 and 2013 the top 10% of properties in PCL increased in value by 190% while the bottom 10% only increased by 63%.
You want to ensure that you are in the top 10%. If you would like to discover how to do this, simply request a complimentary copy of my book, The Insider’s Guide To Acquiring Luxury Property in London, which reveals the strategies and techniques I have been using for over 18 years to acquire some of the world’s most successful families and business people, their ideal homes and investment properties for prices they didn’t think possible.
To request your free copy, simply email firstname.lastname@example.org or call 02034578855 (+442034578855 from outside the UK).
Of course, if you know everything there is to know about buying in London then the book is not for you. But if you are planning to buy a £1m property, for example, then you only need to discover just one tactic that shows you how to negotiate a mere 1% more off the purchase price, to make the book worth £10,000 to you.
Would that be a poor use of your time to request it?
So, whether you are planning to buy a home, investment, a property for your children or a pied-a-terre, you can request a complimentary copy of The Insider’s Guide To Acquiring Luxury Property in London, by calling 02034578855 (+44203478855 from outside the UK) or emailing my assistant, Veronika, at email@example.com now.