Rumours about tax cuts in this week’s Autumn Statement are continuing but there are warnings that a Stamp Duty cut may not be as beneficial as some hope.
Chancellor Jeremy Hunt is rumoured to be considering cutting Stamp Duty during his fiscal update this Wednesday, with some expecting support for downsizers.
But Tim Walford-Fitzgerald, private client partner at the accountancy firm HW Fisher, suggests this could actually be bad for first-time buyers.
He said: “Cuts to Stamp Duty Land Tax will likely result in higher volumes of property sales but the Chancellor must consider the knock on effects. For example, the introduction of a ‘downsizing relief’ may drive more “empty nesters” to sell up and increase the number of larger properties coming onto the market - but these downsizers still need to live somewhere.
“This could drive competition over properties that are classic first time buyer territory, pushing up the prices for a demographic that the Government should be supporting.”
Walford-Fitzgerald said the chancellor should be looking at the supply side of the market.
He said: “Currently large property developers are subject to a 4% increase in their tax rate on annual profits over £25m.
“By reducing the tax burden on builders who complete developments quickly, using information like property purchase dates, planning consents or both, this could build the foundations for a longer term solution for the UK property market.”