From City AM:
MIDNIGHT, 3 December 2014 is a date to celebrate for UK home buyers. Anyone purchasing a property worth less than £937,500 is now paying less tax. The chancellor’s move to scrap the invidious slab-style stamp duty land tax (SDLT) regime, introduced by Labour in 2000...
Fair enough so far, adjectives aside. Then the woman works herself into a complete London-centric Home-Owner-Ist frenzy:
There is little doubt that such increases will be unsustainable and the market between £1.5m and £2m will collapse. There is also little doubt that there will be a bottleneck around £937,500, where buyers start losing out under the new regime, increasing demand and piling upward pressure on prices below this.
Nonsense, there was a definite cliff-edge under the slab system which has now entirely disappeared, there will be no bottlenecks, and certainly not around the £937,500 mark (which is the top one per cent of homes by value). What she refers to as "collapse" means that prices will adjust accordingly.
Of course, top end properties in the exclusive prime central London market, where one in two properties are over £1m, are not immune and buyers will feel the pain the chancellor intended. However, they are less likely to be domestic, but international, making discretionary purchases with discretionary wallets to match.
So she's just completely contradicted herself - she started off by saying that prices will adjust , i.e. the seller bears the tax and benefits from the tax reduction, and now she says that "buyers will feel the pain". Which is it? If anything, downsizers will feel the pain (one reason why SDLT is such a bad tax).
But yes, such homes are not bought by "hard working Londoners", not by any stretch of the imagination. Prices here are crazy, a decent, entry level home for a normal family is about £400,000, but everything above that is conspicuous consumption (my family is conspicuously consuming a lot more than that, which is our free choice).
Culminating with this...
In conclusion, the SDLT changes are a bold step and one in the right direction. But if I were Osborne, I would be looking very hard at how to decrease the pain among hardworking, career-minded up-steppers in London. They are the Tory heartland. They are the heartbeat of our economy, whose aspiration – and seemingly main sin – is to want to own a modest family home in one of the most expensive capitals in the world.
i. Hang about; that's her second contradiction - first she said that £1m-plus homes are bought by wealthy foreigners and now she says they are bought by "hardworking, career-minded up-steppers".
ii. "Hardworking people" are not "Tory heartland". There are hardworking people - from bus drivers to brain surgeons - of all political persuasions (from BNP to Green Party) and none. I would consider all the YPP members I have met to be "hardworking".
iv. A "modest family home" in London costs £300,000 - £400,000, not £1 million. If people want to pay £600,000 - £700,000 extra to be half an hour closer to the centre and/or have an extravagently large house, that's their call.
Friday, 5 December 2014
From City AM:
My latest blogpost: Shroud Waving Of The WeekTweet this! Posted by Mark Wadsworth at 10:28