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UK Economy
Stamp duty reforms to boost house sales
From the Financial Times of Thu, 11 Dec 2014 00:23:03 GMT
A pedestrian reads property information leaflets displayed in the window of Winkworth's estate agent's in the Kennington district of London, U.K., on Monday, Aug. 18, 2014. London home sellers cut asking prices by the most in more than six years this month, adding to signs that the property market in the U.K. capital is coming off the boil. Photographer: Simon Dawson/Bloomberg©Bloomberg

Stamp duty reform will boost UK house sales by as much as 5 per cent during the next year, according to a survey of estate agents.

The findings by the Royal Institution of Chartered Surveyors are based on a snap poll after George Osborne’s surprise announcement last week that he is scrapping the current system following a recent softening of the housing market.

The Rics survey forecast that the new sliding scale for the tax on property purchases could raise the number of transactions by 2–5 per cent during the next 12 months.

This contrasts with the most recent monthly Rics survey, conducted just before the Autumn Statement, which showed that house price growth dipped for the sixth consecutive month in November, recording the slowest pace of growth since May last year.

That comes against a backdrop of estate agents reporting both weaker demand for the fifth consecutive month — with 15 per cent more surveyors reporting a decline in new buyer enquiries — and a fourth consecutive fall in supply.

The survey, which has been running since January 1978, suggested supply is very tight with the number of residential properties for sale at its second-lowest level since records began — with an average of 56 properties on the books per branch.

The findings mirror other surveys that show that house price growth is slowing across the country.

“The stamp duty reform could reverse the softer trend in buyer enquiries that has been visible in recent months but a critical issue in terms of how it plays out with prices is whether it also encourages more vendors to consider putting their properties back on the market,” said Simon Rubinsohn, Rics chief economist.

“The expectation from members that transactions could increase by up to 5 per cent over the next year on the back of this measure suggests that there is a belief that supply will indeed respond to the tax change.”

Across the country, price growth was strongest in Scotland and southwest England, and weakest in the north of England and London in November. Recent forward-looking data has suggested that the booming housing market in the capital was beginning to soften.

Recent research for the Financial Times found that London’s commuter belt and its cheapest boroughs would be the biggest beneficiaries of the stamp duty reform

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