In her speech to the Labour Party conference, Chancellor of the Exchequer Rachel Reeves hinted that next month’s Budget might have to include tax increases, telling delegates that “harder choices” lie ahead when grappling with the nation’s finances.
All sorts of things might be targeted in the Budget and that might include having to break some Labour manifesto pledges. However, anyone planning to buy a house will not just be thinking about how this affects their overall finances; some specifically relevant areas, like stamp duty, might be affected.
Estate agents in Leicestershire will be watching the November 26th speech closely and ready to provide help and advice if this is the case, enabling you to take steps accordingly to meet the changes.
Stamp Duty Changes Or A New Property Tax?
Some might expect a simple hike in stamp duty to put more money in the Treasury’s coffers. Among other speculated changes is a new annual property tax on more expensive homes that would be paid either instead of, or in addition to, stamp duty, by the buyer.
A survey by TLF Research found that 96 per cent of homeowners thought this would be unfair, as would a proposal that the stamp duty be paid by the seller, not the buyer. Other findings showed widespread concern that such measures would be very unfair to older sellers wanting to downsize.
Part of the speculation is that an annual property tax would be set at 0.5 per cent on homes valued at over £500,000. This may be of much greater concern to people living in more expensive areas of the country, such as London, where such prices (and higher) are the average, whereas the typical home in Leicestershire is much cheaper.
For example, the average property price in Leicester is £232,000. In Blaby, it is £286,000, which is the highest of any local authority in the county, followed by North West Leicestershire at £272,000.
Nonetheless, there will be some houses in the county that are priced over £500,000. It may be that in the case of those priced just above this figure, sellers will have to drop the asking price to just below, as buyers will want to avoid any new property tax.
Wriggle Room In Manifesto Pledges
In its 2024 election manifesto, Labour’s five pledges included more economic stability, which included a pledge to “keep taxes as low as is possible”. That, of course, is the kind of pledge that can easily be rationalised when a government feels it has little option but to raise taxes.
The only specific stamp duty pledge was a one per cent increase on the rate paid by property purchases by non-UK residents. However, in her first Budget, Ms Reeves did impose more changes.
Some of these were not a concern to most buyers, such as higher stamp duty rates for second home purchases and purchases by companies (the latter acting as a deliberate disincentive for buy-to-let investors).
While such tinkering will bring in some extra revenue while reducing certain types of purchases, more fundamental stamp duty reform was avoided. It remains to be seen whether that is being lined up for this year.
Either way, once whatever is hidden in the famous red box is made public, we can help you understand the implications for your house purchasing plans of any changes that are made.
