The director of Reeds Rains and Your Move, Adrian Gill say that history has shown buyers rush to take advantage of positive tax regimes so this will apply when the stamp duty surcharge comes into effect in April 2016.
Gill comments “In Scotland after the Land and Buildings Transaction Tax was announced there was a surge in the sales of high end properties to beat the deadline. England and Wales may now feel the same forces, as there will be a growth in demand from both first time buyers with extra financial support and buy to let landlords hoping to invest before the tax changes come into force”.
He predicts that “While the Chancellor has planned to increase the number of houses being built, none of these will be completed in the next few months. As the number of houses on the market is at a historically low level, those rushing for the April deadline will be fighting for a decreasing number of properties. So we could see a spike in both house prices and sales over the normally frosty winter period”.
This will be most obvious in second home areas as Gill explains “For example, this could be most obvious in Salcombe, Devon. The town has the highest percentage of second homes in England. In Salcombe, the average price paid for a home in the last year was £532,000. A second home buyer here would need to find an extra £15,960. With such a significant hurdle after the tax comes into force, anyone who wants to buy a home in the area will be rushing to buy before April 2016”.
Gill anticipates that in London, the maximum price of homes which can be bought under the Help to Buy ISA may not be as beneficial as proposed. He says “Currently, the upper limit of £450,000 could only buy the average house in twelve boroughs. Even in these areas, prices are rising annually by an average of 12.5%, so London buyers will have to be quick if they are to make use of schemes like the Help to Buy ISA”.
Annual prices across England and Wales have risen 6.0%, demonstrating a full-year increase of £16,446, which is the equivalent to £45 per day. But, the level of growth in November plunged to 0.6%, which is down from 0.9% a month previous.