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Announcing that that the starting threshold for Stamp Duty will be increased to £250,000 from £125,000 for first time buyers, the Chancellor said that this move will benefit nine in ten first time buyers.
However, other property investors – especially the wealthier ones – have been warned that they’ll be footing the cost, as this particular sweetener will be paid for by raising stamp duty on properties worth more than £1 million from 4% to 5%.
The change will take effect from midnight tonight and industry pundits have already predicted that the 1% rise on pricier properties, which will come into action from April next year, could have an impact on the still-fragile commercial property market.
Daniel Churchill, director of specialist packager, Commercial 1 Limited, commented: “The rise in Stamp Duty to 5% on property values over £1m is disappointing, but probably necessary, furthermore, we are not currently seeing a lot of new deals at this level in the current climate.”
He added: “The removal of stamp duty for first time buyers on property values below £250,000 would obviously benefit the vast majority of mortgage transactions and, from a Commercial Mortgage perspective, I can see this helping existing small businesses that have previously been renting and were thinking about buying their first commercial property, as well assisting any potential new business start ups.”
Increasing the threshold to £250,000 now means that two thirds (65%) of all properties currently on the market across the UK are exempt from stamp duty tax for first time buyers.
According to the site, FindaProperty.com, 43% of all properties currently for sale cost between £125,000 and £250,000, and with people buying at this range who will make the saving, the total saved in stamp duty from these sales could amount to a staggering £320,625,000.
However, London estate agents have cast a negative light on Chancellor Darling’s generosity. Peter Rollings, managing director of Marsh & Parsons, said: “The Chancellor’s measures are not going to help first time buyers looking for property in central London. His changes are just going to tax Londoners and the South East, where property prices are proportionately higher, harder.
“Only 3% of the homes we have for sale fit into the sub £250,000 category, but the increase tax payable on a home worth £1million – which is not the preserve of the super-rich in the capital – will hit Londoners hard. Lots of flats fit into that category in London.
“There will be repercussions for the wider property market down the line.” He added forebodingly.
Source: Bridging and Commercial