Johnson considers Stamp Duty switch from buyer to seller

by Property 118

9:27 AM, 15th July 2019
About A year ago

Johnson considers Stamp Duty switch from buyer to seller

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Johnson considers Stamp Duty switch from buyer to seller

Conservative Party leadership contender, Boris Johnson, has confirmed his interest in switching Stamp Duty liability from the house buyer to the seller as proposed by Association of Accounting Technicians (AAT).

Last year Johnson stated Stamp Duty was “absurdly high” and last month he suggested he would consider scrapping it for homes worth £500,000 or less.

Earlier this month, Johnson met with AAT and agreed to examine their Stamp Duty recommendation further, requesting further information which has subsequently been provided.

Phil Hall, AAT Head of Public Policy and Public Affairs, said: “AAT is naturally pleased that Boris has agreed to look at our long-standing proposal to switch Stamp Duty liability from the buyer to the seller. This will save the taxpayer £700m a year by rendering First Time Buyers Relief redundant. It will also protect the £9bn of revenue Stamp Duty generates as it will still be paid in full, simply by different people. It is also much more progressive as it will be paid on the lower priced property being sold rather than the higher priced property being bought.”

The idea certainly appears to have the support of home buyers too.

Tony Richardson and his partner Caroline Danks live with their two young children in a three-bedroom terraced house in Plymouth, Devon. They are now looking at buying a bigger house but have concerns about Stamp Duty costs.

Tony Richardson said: “One of the things that’s made us delay buying a bigger house is the huge amount of upfront costs we will have to face, legal fees, mortgage arrangement fees and the biggest of all, Stamp Duty. That’s why the AAT recommendation to switch Stamp Duty liability is so attractive – it will mean we pay less as we’d only have to pay it on the house we are selling not on the one we are buying. I hope the new Prime Minister, whoever he is, seriously looks at this because it will make a real difference to people like us.”



Comments

Rob Thomas

10:13 AM, 16th July 2019
About A year ago

As most of us homeowners have done well out of the housing market through many years of rising prices, I don't think this proposal is a bad idea.

Many buyers, especially first time buyers have limited amounts of cash so stamp duty restricts the value of properties they can afford. If they paid no stamp duty but the seller raised the price a little to compensate for the cost of stamp duty at least the buyer might be able to borrow most of the extra money on their mortgage rather than having to fund it in cash. So this measure could help to improve liquidity in the housing market.

Ian Narbeth

10:50 AM, 16th July 2019
About A year ago

Reply to the comment left by Mick Roberts at 16/07/2019 - 07:57
Mick
It may be an imaginary problem. Suppose you are selling your house and SDLT is £X. If the Seller sells for £300,000 + £X and has to pay £X to HMRC, he is in the same position as if he sold for £300,000 and the buyer paid £X to HMRC. My point is the price will be adjusted. Buyers can bid higher knowing they don't have to stump up the SDLT.

Mick Roberts

11:19 AM, 16th July 2019
About A year ago

Reply to the comment left by Ian Narbeth at 16/07/2019 - 10:50
But they won't will they. Buyers won't say Ooh I'll pay 3k more for your 100k house cause you've got 3k stamp duty to pay.

I never got my sellers to reduce to pay my SDLT I was paying them.

The price is normally the price except in great rising markets.

S Somerset

12:16 PM, 16th July 2019
About A year ago

Reply to the comment left by Mick Roberts at 16/07/2019 - 11:19
It could go either way:
eg. For those moving up the ladder selling their £200k house to buy their new £400k house they will think that they're 'saving' stamp duty on £200k, so might be willing to sell their £200k house for less!

Who knows?!

Ian Narbeth

12:26 PM, 16th July 2019
About A year ago

Reply to the comment left by Mick Roberts at 16/07/2019 - 11:19
Mick
We must agree to disagree. We have not had a time when Sellers paid the SDLT so you can't know for sure how buyers will react. If valuers value at the headline figure then buyers can borrow a higher percentage of the total costs they have to find to purchase. I can see this leading to an increase.

However, anyone buying at auction had better check the Special Conditions carefully because I foresee sellers charging that (as well as generous seller's solicitors's fees, as presently happens) to the buyer.

Darren Peters

12:31 PM, 16th July 2019
About A year ago

The sale price will be adjusted to reflect SDLT due the seller - no real change as people & the market aren't as stupid as politicians suppose. So house price inflation will be the result.

If a seller needed £100K out of their home for their future plans and SDLT reduced that amount they might just stay put for a few more years - especially if they had felt aggrieved that they had already paid SDLT on purchase. So possible sales slowdown too.

If SDLT is abolished or not on sales below £500k is a separate matter.

Mick Roberts

13:07 PM, 16th July 2019
About A year ago

Reply to the comment left by Ian Narbeth at 16/07/2019 - 12:26
Yes we will disagree ha ha. You've got people who buy cash who won't be borrowing to pay the SDLT.
And I'm saying no more cause u a law man.

Mark Alexander

16:38 PM, 18th July 2019
About A year ago

Bojo will doubtless be “considering” lots of ideas for reforms, but I don’t think he’s daft enough to agree to a proposal of this nature. Time will tell.

THALIA K

7:45 AM, 20th July 2019
About A year ago

So what about as folks who bought a second property at top of the market, paid the additional 3% stamp Duty and now want to sell? Will we pay stamp duty twice in a short period of time? What if we are in negative equity already?

Colin Dartnell

7:56 AM, 20th July 2019
About A year ago

It will instantly put up the prices of houses as sellers try to compensate themselves for the cost.

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