Mortgage brokers were left disappointed the Chancellor once again failed to reform the stamp duty ’slab’ structure.
Delivering his fifth Budget this week, George Osborne pledged to put an end to stamp duty avoidance by hitting companies buying properties worth over £500,000 with a levy of 15 per cent of the purchase price.
The new tax came into effect at midnight on 20 March and will not apply to properties rented out to tenants.
In the 2012 Budget, Osborne announced homes worth more than £2m would face a stamp duty rate of 7 per cent.
In this year’s Budget, he said: “We are expanding the new tax we introduced to stop people avoiding stamp duty by owning homes through a company. We will expand the tax on residential properties worth over £2m to those worth more than £500,000.
“Anyone purchasing a property worth over £500,000 through a corporate envelope will be required to pay 15 per cent stamp duty. None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end.”
Borrowers purchasing a home under £125,000 are exempt from paying stamp duty. It is then taxed at 1 per cent of the purchase price between £125,001 and £250,000; 3 per cent between £250,001 and £500,000; 4 per cent between £500,001 and £1m; 5 per cent between £1m and £2m and 7 per cent over £2m.
Lentune Mortgage Consultancy managing director Stuart Gregory says: “Stamp duty is so wildly overdue for reform. Reforming stamp duty would have given people a lot more help and I think that will hold back the market this year.
“It would not surprise me if Osborne used this as a sweetener in next year’s Budget to get votes.”
Springtide Capital managing director Henry Knight wanted to see another stamp duty holiday for first-time buyers, adding: “The building and development of new homes is all very promising but without further financial support for first-time buyers it is somewhat futile.”