Sort it out, Chancellor! Top agent leads attack on stamp duty chatter

One of the country’s leading estate agents is leading the calls on Chancellor Sajid Javid to sort out the government’s stamp duty intentions once and for all - and to do so quickly.

There has been substantial publicity in recent weeks to the government’s broad intention to reform stamp duty, but there have been contradictory noises from both the new Prime Minister and his new Chancellor.

Trevor Abrahmsohn, head of Glentree Estates in London and a founder of the original mutual company behind OnTheMarket, says he supports the principle of shifting stamp duty from buyers to sellers - an idea which Javid appeared to back at the end of last week, before disowning it at the weekend.

“We all understand that the Tories are on manoeuvres for an election, which will be called in the next month or so,” he says. 

“The problem with the Chancellor making sound bites about SDLT reforms in the next Budget is that they hold back transactions which would have otherwise taken place, since people want to benefit from any changes, before they commit themselves. This exacerbates the hiatus” he continues.

“So, think carefully before you act Mr. Javid, since the private residential property sector is the ‘golden goose’ and we have never needed its ‘golden eggs’ as much as we do now.”

Abrahmsohn’s call for clarity in the government’s intentions is echoed by many others in the industry.

Jason Honeyman from the house builder Bellway says: “Any speculation about stamp duty often creates delays as buyers often put off buying through fear of paying too much.”

And Lauren Atkins of niche house builder The Malins Group adds: “Constant speculation is damaging confidence of everyone looking to move or invest in property. An early Budget could make it clear what the Chancellor intends to do to help unlock the market.”

Although Abrahmsohn is an advocate of switching stamp duty liability, partly or wholly, from buyer to seller, he says this could be counter-productive without the overall level of duty being significantly reduced. 

He gives an example of the problems a hasty and half-baked stamp duty change could create.

“If a house owner has a 70 per cent mortgage on a £2m property (which doesn’t buy a lot in the capital) technically they own net 30 per cent of the equity. If, however, the Stamp Duty liability changes then the owner’s net equity could drop from 30 per cent to, say, 21 per cent which will alter the loan-to-value ratio, as far as the mortgage lender is concerned” he says.  

“This means that the owner may have to stump up some cash, to pay back some of the loan in order to maintain the 70/30 ratio of lending for the mortgagor. Can you just hear the howls of derision?” asks Abrahmsohn.

He says that a total switch of liability from buyer to seller at current stamp duty levels would mean the seller may not put their home on the market at all.

“Yes, buyers who have been relieved from this liability will have a new spring in their step, but since there will be very few properties around to buy, it could drive prices northwards, which is not the purpose of the exercise” he predicts.

During the Conservative leadership campaign Boris Johnson pledged to drastically cut stamp duty, without giving specifics; he was lobbied by a trade group, the Association of Accounting Technicians, which advocates sellers and not buyers paying duty.

The AAT says Johnson pledged to at least consider a switch in liability, while Sajid Javid indicated to The Times at the end of last week that he might consider it too. 

On Sunday, however - after some protests from property professionals - Javid tweeted that such a switch was no longer on the agenda.