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December 10, 2014

Stamp duty savings will be lost as prices rise

Analysis conducted by the Centre for Economics and Business Research has suggested that stamp duty bills on over 600,000 homes will rise rather than fall over the next five years due to the new system pushing property prices up. Next year alone, the CEBR said 400,000 homes would face higher bills if placed on the market, a number set to rise 680,000 by 2020, despite George Osborne claiming bills would be lower for 98% of Brits under his revisions. Zoopla claims there are 26,145 homes currently on the market which will experience a rise in stamp duty. Separately, Matthew Pointon, property economist at Capital Economics, is one of many industry professionals to warn that stamp duty reforms will harm first-time buyers rather than aid them. "As with all property taxes, changes to stamp duty are likely to be quickly reflected in house prices," said Mr Pointon, who believes prices will rise by around 1%. Times cites research by Savills which found that homebuyers in 15 UK local authorities, 12 in London, will pay more under the new stamp duty. Waltham Forest in London is the biggest winner, with the average stamp duty bill falling £2,107, followed by Epsom and Ewell in Surrey – where it falls £2,096. All bar one of the top 10 areas for savings, East Dorset, are located in the South East. “The data shows how the tax has become increasingly focused on the more expensive boroughs of London. Combined with the increases to the non-doms levy, it is very difficult to argue that this end of the market is undertaxed. This means it is far more difficult to justify the need for a mansion tax,” comments Savills’ Lucian Cook.