16:33 PM, 22nd March 2012, About 10 years ago
Chancellor George Osborne’s Budget 2012 was a chance missed for reforming property tax, says the industry.
Many are also breathing a sigh of relief that stamp duty reforms have glossed over commercial property.
The anomaly in the market is a £2 million house owner pays draconian duty starting at 7% for personal ownership and stepping up to 15% for offshore corporate ownership.
That’s a whopping £140,000 at 7% – equivalent to a new Aston Martin Vantage or DB9 – or £300,000 at 15%, which leaps above the list price of a new Ferrari.
The likelihood is many who can afford a home valued at £2 million will either buy for £1.9 million and pay 4% – a measly £76,000 in stamp duty – or not wince at the extra cost.
Meanwhile, commercial property carries on as usual – with no 7% plus stamp duty rate and the opportunity to avoid stamp duty with corporate ownership.
Liz Peace, chief executive of the British Property Federation, said: “We asked the Chancellor to do no serious harm in his Budget to an industry that is still struggling – by and large we’re satisfied this is the case. It certainly could have been a lot worse.
“The commercial property industry looks to have dodged stamp duty reform. In the run up to the Budget there were a few concerns that the Chancellor may cast the stamp duty net too wide and inadvertently capture the commercial property industry alongside the super-rich residential market.”
Buy to let landlord groups also called on the Chancellor to streamline property tax to reflect letting is a business rather than an investment – but he ignored the calls.
David Salusbury, chairman of the National Landlords Association (NLA) said: “Regrettably, there has been no recognition in the Budget statement of the barriers to investment presented by the current system of property taxation. “The NLA will seek discussions with the Treasury to see whether it is possible to differentiate genuine property businesses from companies set up purely for tax-avoidance. “Calls for a comprehensive review of stamp duty continue to be unheard. This could have been a good opportunity to stimulate more investment and encourage growth in the residential property market.”
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