In readiness for the big day, the herald angels harked this week, not about the new born king, but about Gideon, I mean George’s new stamp duty threshold. Alongside the heavenly hosts, the not so celestial Fourth Estate -dependent upon the colour of their political ichor-proclaimed, “the new boom is here” or for the more melodramatic, “we are all doomed”. Step forward Vince and Ed.
It is terrific news for those buying up to £1million and not so palatable for those over the £1 million barrier. I think that I can confidently say there is nothing to worry about in Cwmbran or even Fochrhiw where you could buy the whole town for less than a marigold. (Q. Why was marigold adopted as slang for a million? Answers on a postcode to the office; the winner gets a signed picture of GC). Looking at some real life examples, we were due to exchange contracts last Friday on a property selling for £160,000. “We are all ready” was the familiar solicitor’s cry. Stamp duty would have been £1600 – a not inconsiderable sum. We did not exchange until yesterday when stamp duty was a much more palatable £700. A terrific result for the young couple buying the house and a chance for the solicitor to claim supreme prescience in that looking after his clients he chose to wait for the outcome of the Autumn statement. A great bit of self promotion until his legal assistant rather let the side down when she informed us that, “we weren’t ready Friday because we still hadn’t got all our enquiries back”. Ah well.
We have also sold a property for £400,000, with exchange set for 16 January. The old stamp duty would have been £12,000. The new threshold reduces it to £10,000 , prompting the vendor to ring up and tell us to put up the price by £2000, as the people buying it (under the historic threshold), “were going to be spending that anyway”…
According to the all-seeing, all-knowing entity that is Rightmove, yesterday there were a total of 350 properties, up to the value of £1million on the market in Cwmbran. 345 of these are priced under £500,00 and 251 under £200,000. I think that it is quite clear where the market base lies. Will the new stamp duty levels cause an explosion in prices in NP44? I don’t think so. What will change is that buyers looking to purchase around the £125,000 to £135,000 mark will no longer have the old stamp-duty threshold as a bargaining tool to to get a price reduction. Similarly, agents marketing properties in that bracket will no longer be able to use, ‘Stamp Duty Paid’ on a set of details or as an extra incentive to have reason to replace the ‘For Sale’ sign with a ‘Sold’.
It will be a very different matter in London, the Home Counties or whatever postcode where properties exchange for considerable sums of money. An article in the Sunday Times last weekend featured 9 houses that, “had to be sold” by Christmas Ruth Bloomfield Sunday Times 30 November 2014. One of them, on the market for £2.35 million was offered with stamp duty-a whopping £160,000-paid by the vendor. Since Tuesday’s announcement, the stamp duty moved to an even more eye-watering £282,000. I checked both Rightmove and the agent’s website this morning and the vendors are still offering to pay the stamp duty, on the proviso that exchange must take place before Christmas. Good luck to them, particularly in finding a solicitor’s office that is functioning after 12 December.