Many in the property industry have called out for the new Prime Minister, Boris Johnson, to act decisively on his previously proposed plan of possibly scrapping Stamp Duty on homes under £500,000, at the same time cutting it from 12% to 7% on properties valued at over £1.5m. The hope is the proposed changes would mitigate the potential negative impact of the recent political instability and would improve buyer confidence in the market.
In the past, Prime Minister Boris Johnson had said that he would potentially call for an emergency Budget meeting in September where he would implement changes to current Stamp Duty legislation and drastically raise the threshold to the aforementioned £500,000. Excessive Stamp Duty charges have long been a challenge for those on all levels of the housing ladder, so both buyers and sellers will now be eagerly awaiting confirmation on how he intends to address this.
Free up over 300,000 buyers from Stamp Duty
Should the proposed changes be made it would essentially free up over 300,000 property buyers from having to pay Stamp Duty, based on figures from 2018/2019. The number could even increase as sellers just over the threshold drop their price to entice interest. When you consider the homes sold that are already exempt, over 650,000 transactions from last year would not have had to pay the tax.
The change could mean that entire regions where the average price of property is below £500,000 would be lifted from paying Stamp Duty. This would boost transactions in these pockets of the market and assist with economic growth in these areas.
Possible switch from buyer to seller
Johnson had also said that he may switch the responsibility of paying the tax from buyers to sellers – a drastic move that would greatly benefit potential buyers. Taking Stamp Duty off the table for prospective buyers would be a huge advantage, particularly for those who are looking to upgrade to a larger home to meet their growing family needs. However, the change would bring about a few issues. For example, someone who is currently selling their home would have paid Stamp Duty on it when they purchased it. With the proposed change, they would then have to pay it again when they sold. Essentially, this would equate to double taxation. Sellers may also push up their asking price in a bid to cover the additional Stamp Duty charge they would incur.
There is also the question of retirees who are selling to downsize. Selling a large home would mean paying higher levels of Stamp Duty, which would be a blow for someone planning for their golden years.
More buying power for first-time buyers
As it stands, buyers purchasing a home under £300,000 are exempt from paying Stamp Duty. The proposed increase in the threshold would give them the option to purchase a higher-priced home, while still being exempt. This is provided of course, they can afford a home over £300,000 and have the money for the deposit and other costs involved in purchasing a property. A study from the Royal Institution of Chartered Surveyors found that there had been no significant positive impact on property sales after the change in Stamp Duty in November 2018, so perhaps it is unlikely that any further change would bring more first-time buyers to the market. That said, the number of first-time buyers continues to increase, which can be attributed to other aspects such as Help to Buy.
Get the market moving
The idea behind the proposed policies is to the get market moving in sectors below £500,000, as well as those at the top end. The hike in Stamp Duty for homes over £925,000 in November 2014, greatly effected the top tier of the market slowing it to a near standstill. Ever since, transactions in the upper end of the market have suffered. The proposed cut from 12% to 7% would do much to invigorate this end of the sector, even if only for a time.
Iain McKenzie, CEO of The Guild of Property Professionals, said he would welcome any positive move by the new Prime Minister on Stamp Duty and taxes on landlords. “I am in favour of anyone who is going to improve sentiment or confidence in the housing market. Current economic data is strong, but the uncertainty of Brexit has caused stagnation in the market. Mr Johnson’s commitment to ‘deliver Brexit’ on 31st October with a new ‘can do’ spirit is therefore very much welcomed.”
While the changes are merely talk at the moment, should they come about, it will be intriguing to see what impact they will have on the market moving forward. For more information about the current Stamp Duty thresholds read our blog on the subject.
In today’s fast-moving technological age, new developments in tech are constantly being introduced that are having a significant impact on the property sector. The most recent is the introduction of virtual tours and virtual reality (VR).
While Virtual Reality (VR) is by no means a new concept, rapid advancement in augmented reality technology has meant that it is now at the point of having an impact on consumers’ day-to-day lives.
Augmented reality provides an additional layer of 3D content to the user’s actual surroundings, while VR fully submerges the user into a created environment and virtual world. By wearing a headset, the user is transported to another place offering them a 360-degree view of their simulated surroundings.
According to statistics, around 95% of home buyers use the internet as their initial search method when looking for a property, with approximately half of buyers purchasing a home that they found online. The integration of VR is adding to the experience and making it far easier.
What are the benefits of virtual reality?
The applications of VR within the property sector are limitless and it offers benefits to both estate agents and their clients. With most people viewing between five and seven homes before they make an offer, VR can save a lot of time and money.
It will also make it far easier to look for homes in other parts of the country or abroad without the need to travel. Buyers can virtually tour multiple properties from the comfort of their own home in a matter of minutes. The process will allow potential buyers to check through several properties and quickly narrow down the field to a few choice homes that they would like to take a second look at in person.
VR can also be an excellent tool for new build developments when the property has not yet been built. A virtual tour will turn imagination into reality, offering the potential buyer a look into what the home will look like once it is finished. Buyers will be able to view an off-plan property, make comments or suggestions and get an idea of the space and how it works before ground has been broken.
Although the majority of people have heard of VR, not everyone has had the privilege of actually experiencing it first-hand. While the technology is in place, it will still be a while before we see everyone searching for a property this way. However, that said, it is becoming more mainstream and accessible and there are already elements of VR that are already being used by the general public, such as Google Street View, which allows the user to visit city and suburb streets that they have never actually set foot on. VR headsets are also becoming far more commonplace in many households.
What can we expect from virtual reality in the future?
Technology commentators say that in the near future we will see the introduction of haptic or kinaesthetic communication to VR. Using forces and sensations, the technology will replicate the sense of touch and allow users to see their hands in the virtual world. The user will be able to open doors and cupboards, interacting with their virtual surroundings when viewing a property.
Further developments are also being made to introduce the other senses into the VR world as well, such as smell and taste. During a VR viewing, the buyer will be able to smell the freshly brewed coffee or baking cookies, which will have a subconscious effect on their opinion of the property. These aspects could be used to simulate the same emotional response in buyers, as they would if used in home staging during a viewing in person.
However, even with the advancement in technology and possible application, it remains to be seen whether the virtual world will ever truly rival the actual experience of shopping for a home in person.
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