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Housing market in a ‘parlous state’: No more new taxes, plea to Chancellor

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Thu 06 Dec 2018

Housing market in a ‘parlous state’: No more new taxes, plea to Chancellor

Chancellor Philip Hammond is being warned that the property market is “in a parlous state”.

He has been told that any further property taxes could harm the Government’s already dwindling Stamp Duty takings.

The plea comes as the Government plans to introduce an additional Stamp Duty levy of 1% on non-resident purchases, with a consultation due in the New Year.

But property investment firm London Central Portfolio (LCP) has warned that analysis of HMRC’s third quarter Stamp Duty receipts shows liable transactions fell 4% annually to 290,740, down 8.7% on three years ago.

Tax receipts were also down 8.2% annually, to £2.39bn.

Naomi Heaton, chief executive of LCP, said: “The fall is undoubtedly due to investors withdrawing from the market until they can see some light at the end of the Brexit tunnel.

“The toxic political climate and stagnating prices have brought ever-growing uncertainty to the residential market following several years of increased taxation.

“With the housing market in such a parlous state, it would seem somewhat imprudent for a sitting Chancellor to raise further taxes on the residential sector.

“However, this is exactly what Hammond has done, proposing an additional levy of 1% on non-resident purchases in the most recent Budget.

“The international buyer, of course, is politically a very easy whipping boy. The reality, however, is that for many new-build developments in the UK’s most prominent cities, where price points are unaffordable for the domestic market, these investors represent a significant proportion of buyers.

“HMRC Stamp Duty statistics do not paint a rosy picture of the UK housing market, with neither the buyer nor the Exchequer winning out.

“Until the Government has a clear road map for Brexit we are unlikely to see increasing transactions and therefore increased revenues.

“While it is highly unlikely that the Government will repeal any of their recent tax increases, it certainly does not seem to be the time to implement more.”