Paula Higgins, chief executive of the HomeOwners Alliance, believes that some of the government’s Budget changes today will help homeowners but there are others which will harm.
While the changes announced by the Chancellor today will give a helping hand to first-time buyers who find themselves competing with buy-to-let investors and second homeowners however the government has not listened to our concerns.
Pushing through stamp duty reforms now will cause confusion in the market and may end up harming many of the very homeowners the government meant to help.
Government is still insisting that the 3% is paid upfront. It can then be claimed back when the original home sells. Homeowners thinking of downsizing could be deterred from selling as they may need to find additional thousands of pounds to complete their move. We should be encouraging those who want to downsize by removing barriers rather than creating them.
This is just one example of how the stamp duty surcharge is being implemented will cause unintended consequences and perverse incentives.
We highlighted other examples in our response to government on the changes.
Pushing through an over-engineered and complex system will not benefit the market and will just encourage bizarre behaviour, for example by temporarily transferring ownership of a cheap holiday home in order to avoid a 3% surcharge on an expensive family home.
The government is asking conveyancers to police the system. For homeowners this will just result in additional costs, delay and uncertainty to what is already an inefficient and messy system of buying and selling property.
Government has promised that some of the additional tax collected will be ploughed back into those communities where the impact of second homes is acute.
Only if they follow through on this commitment (which we have our doubts given their past record), then house prices in popular second home areas should start to stabilise as more homes become available.
Unfortunately the more likely scenario is that affordable housing will still be lacking in these communities and wannabe second homeowners will get hit with the one-off tax surcharge.
The government missed a trick here – capital gains tax should be cut on properties to encourage people to sell.
This could make a real difference in those areas where there is a shortage of available and affordable housing.