When the chancellor George Osborne announced changes to Stamp Duty calculations at the end of last year, it sparked an immediate spike in activity as people sought to take advantage of what were seen as positive moves. Now that the smoke has cleared, it seems as though this positivity will be longer lasting, with a new report claiming the reform will stimulate the housing market as a whole.
According to Nationwide, more than two-thirds of all buyers across England and Wales will feel the benefit of the changes, with London and the south surprisingly being the areas that will see the most positivity. It had been feared that buyers in London would be left paying more because of the high value of their homes, but it appears that the majority will actually pay lower tax on their purchases.
The changes to how Stamp Duty is calculated saw the government get rid of the archaic system under which the total value of a home was taxed one single amount depending on which price band it fell under. The new rules mean that Stamp Duty is worked out in the same way as income tax, with only the portion of the value above each band being taxed at that level.
Nationwide said that overall some 98 per cent of people moving home will either pay the same Stamp Duty as they would have done before the change, or less. In London, more buyers will benefit than in any other area, with 86 per cent of all buyers paying less than they would have in the past.
In the south-east, 85 per cent of all housing transactions will be liable to pay less Stamp Duty than they currently do.
Nationwide said that the main benefit to the housing market will be that house prices can move more naturally in the future, which should help to stimulate the sector as a whole for years to come.
It will remove the clustering of transactions, a reality seen in the past wherein a large number of houses would sell for a value of just under, for example, £250,000 so that the higher tax band could be avoided. Now, prices will be more fluid and people will not be turned off by a home that costs marginally more than the higher band, because their tax will not be affected much at all.
This will mean house prices rising more naturally, as well as a greater number of transactions across the board, which can only help to provide widespread health throughout the property sector in the long run.