Wednesday, 21 September 2022

Home-Owner-Ist understands economics - shock

From The Evening Standard:

But while home buyers may welcome a potential stamp duty cut, it could also lead to them paying bigger monthly mortgage bills, a finance expert has warned.

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said potential cuts to stamp duty may risk “doing more harm than good”. She said stimulating housing market demand could push house prices up further, at a time when the supply of available homes is already tight. Borrowers could then find themselves paying higher monthly mortgage costs if the price they have had to pay for their home has increased.

Correct. Reducing taxation on land and buildings mainly benefits the vendor, not the purchaser. I'm just surprised to see this reported in that bastion of Home-Owner-Ism - a huge chunk of their income is from property porn adverts, so they have to toe the line.

UPDATE: LF makes a good point in the comments. For movers who are buying and selling, SDLT is a bit of a slap in the face. Nonetheless, the overall effect is to depress headline house prices.


Lola said...

My first thought when I saw the idea announced on Guido...but remember they are 'tories'... i.e. rent seekers

Bayard said...

No one is going to take the slightest notice.

Mark Wadsworth said...

L, yup.

B, nope. House prices will continue going up until 2025 or 2026.

L fairfax said...

Wouldn't it make moving cheaper though? If someone has a home worth x and needs to move to another house worth x in a different town.
Isn't getting rid of stamp duty a really good thing for people who have homes and need to move to similar priced homes?
It does happen, fortunately not to me.

L fairfax said...

PS I would say that the effect on HPI is not a good thing which is why I would support LVT replacing stamp duty and other such taxes.

Mark Wadsworth said...

LF, good point.

As between first time buyers and "last time sellers" (heirs selling up and splitting the proceeds), SDLT is neutral and I am rather indifferent.

For sellers/buyers/movers, SDLT is a slap in the face.

LVT is of course neutral between all these parties.

Bayard said...

"House prices will continue going up until 2025 or 2026."

Hmm, just how hard and fast is the eighteen year rule? Lower disposable incomes and higher interest rates are bound to make prices start to come down, which will gum up the market nicely, it always does. With four years to go, that could be but a blip, or it could be the snowball that starts the avalanche. I think this winter will be crucial, especially if it is a cold one.

Mark Wadsworth said...

B, I know, there is always a wobble or two before the real big bust until it seems like the boom is unstoppable. Hold your nerve. People always say "but it's different this time" but it hasn't been for centuries.