Chiswick Residents Pay £29m in Stamp Duty
Property Blogger Andy Berthier says landlords undeterred by surcharge
“A pound saved is worth two pounds earned . . . after taxes” is what my
dad used to say and it is tax I want to talk about today, in particular,
property taxation .. Stamp Duty in fact.
Apart from some minor exemptions, Stamp Duty is paid by anyone buying
a property over £125,000 in the UK. It currently raises £10.68bn
a year for the HM Treasury (interesting when compared with £27.6bn
in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco
duty).
In the latest set of data from HMRC, in the MP constituency that covers
Chiswick, property buyers paid £29m stamp duty in one year alone
– a lot of money in anyone’s eyes (although not as much as the £698m
in income tax that all of us in the same area paid last year).
However, as you may know, George Osborne introduced an
additional tax for landlords and from 1st April 2016 they had to pay an
additional 3% stamp duty surcharge on top of the normal stamp duty rate
when purchasing a buy-to-let property. There were tales of woe and Armageddon
with a report by Deutsche Bank suggesting that the new surcharge could
see house prices fall by as much as 20%.
HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to
back up those fears as they published some worrying figures; only one
in seven properties purchased was a second home or buy-to-let (in real
numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).
In previous articles, I spoke about the slump of property transactions
after the 1st of April (as landlords rushed through their property purchases
in March to beat the April deadline). In Q2 of 2016, £1.976bn was
raised in Stamp Duty from Residential Property. Of that £1.976bn,
£652m was paid by buy-to-let landlords (£424m in normal stamp
duty and £228m in the additional 3% surcharge).
However, looking at Q3, the numbers have improved significantly. Of the
235,000 property sales, nearly one in four of them (56,100 to be precise)
were bought by buy to let landlords and of the £2.208bn in stamp
duty, £864m was paid in ‘normal’ stamp duty by BTL landlords and
an impressive £442m paid by those same landlords in the additional
stamp duty surcharge.
The statistics suggest buy-to-let investors have thankfully not been deterred
by the stamp duty surcharge introduced in April this year. The figures
also show that 65.4% of "buy to let" purchases cost less than
£250,000, 23.7% of properties were in the £250k to £500k
range and 10.9% (or 6,100 additional properties) of buy to let properties
bought cost over £500k – interestingly nearly one in four (22.2%)
of £500k properties purchased in Q3 were buy to let properties.
It just goes to back up what I stated a few weeks ago when I suggested
that many investors had rushed to make purchases before 31st March, making
figures in the following months (Q2) artificially low when the 3% supplement
was introduced, but in Q3 the number of buy to let properties purchased
increased by 85%.
It just goes to show you shouldn’t believe everything you read in the
newspapers! I can assure you the Chiswick property market is doing just
fine.
Andy Berthier
www.chiswickpropertyblog.co.uk
January 19, 2017