The last-minute sale of a £30 million field in Surrey, with planning permission for a Palladian-type mansion — a deal struck before the introduction of the new stamp duty rates at midnight on December 3 — is now seen as one of the few adverse consequences of these tax changes.
The purchasers of the Surrey plot deprived the exchequer of £1.4 million in tax, thanks to their speedy exchange in the final hours of autumn statement day. Yet stamp duty revenues are still set to reach a record £8 billion this year, well above their pre-downturn total.
Meanwhile, according to a Halifax study, there is little evidence of change in the behaviour of buyers. RICS, the estate agents’ body, and others report diminished enthusiasm among house-hunters in the £1 million-plus sector, particularly in London. Yet, to date, the number of transactions has not dropped in this or any other category. Early indications suggest that, even in the capital, activity may be picking up.
The stamp duty makeover is likely to be hailed as a victory by George Osborne in the Budget on Wednesday. He can claim to have lessened the burden for most homebuyers: the stamp duty bill on the average £259,708 property has been cut from £7,791 to £2,985. At the same time, Osborne is squeezing more tax from those who can stretch to a dwelling with a value in excess of £938,000, the point at which stamp duty becomes more punitive. All this may encourage Osborne to feel that he has done enough for first-time buyers, but this would be a mistake. An extension of the mortgage guarantee element of Help to Buy — due to be curtailed in 2016 — would encourage banks to provide loans to young borrowers who are still struggling to accumulate the deposits required to climb on to the ladder. Without finance, a tax perk is just gesture politics.
Statistic of the Week
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The extent of the decline in Spanish property values remains a matter for dispute. This may be because the average 40 per cent price fall masked the crumbling of prices in coastal locations where tattered se vende (for sale) signs flutter outside forlorn and empty apartment developments. When passing such schemes, it is tempting to avert your eyes from these legacies of a construction frenzy fuelled by easy finance and municipal corruption.
However, commentators now glimpse light at the end of the tunnel. The Instituto Nacional de Estadistica in Spain says that prices are increasing at the fastest rate since 2008: the body’s index rose by 1.8 per cent in the final quarter of 2014.
We have selected this as our Statistic of the Week because, this time round, the housing recovery is a side-effect of Spanish economic revival. In the pre-crash era, soaring property prices spurred growth in a relationship that was doomed from the start.
Sterling is at a seven-year high against the euro, turning holidays and homes in Spain into a bargain-seeker’s opportunity. But anyone checking cheap flight possibilities should be aware of other trends in the country’s housing market and psyche. The new Spanish real estate object of desire should have year-round appeal, with winter pastimes near by. It may be a place on the beach, but it may also be in Barcelona or another big city — a draw for tourists and for locals.
The downturn has changed attitudes in a land where owner-occupation was a national passion. Many young Spaniards now regard having a home of their own as a bar to job mobility. This has led to a demand for rental housing, of which there is a dearth in some urban areas.
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Those empty unsold flats are in the wrong place, which somehow makes them an even more sorry sight.
Step outside
Bricks & Mortar readers are optimists. How do we know this? From the recent inquiries about garden furniture trends, which indicates a conviction that Easter will be sunny. We decline to forecast blue skies, but we do predict that grey will be big again outdoors. The price of the John Lewis Ariel sofa, armchair and table set pictured is £950.