"We would like any changes to current property taxes to put affordability and mobility first"
The property platform - the largest in the UK - says that almost a third (30%) of homes for sale in England are priced at over £500,000, and therefore would be subject to the proposed new tax - while in London, more than half of homes (59%) would be affected versus just 8% in the North East.
A fifth (19%) of all agreed sales this year so far have been for homes priced over the £500k limit, although it varies regionally.
Additionally, despite the suggested income from the proposed new 'mansion tax' - applicable to properties over £1.5million, Rightmove say just 1% of agreed sales this year would have been eligible, but it disproportionately affects London (where one in ten - 11% - homes for sale this year are over £1.5m) compared to the North East, where just 0.5% of homes for sale this year have been priced over this threshold.
Rightmove's CEO, Johan Svanstrom, say the impact on first-time buyers could be beneficial - putting the tax burden onto the sellers - but warned sellers could build the cost into higher asking prices. He added: “We would like any changes to current property taxes to put affordability and mobility first. It’s already hard for first-time buyers to save up their deposit to get onto the ladder, and many must fund a large stamp duty payment too. According to our data, around a third of all sales currently going through the legal system are for typical first-time buyer properties, so it’s a big part of the market which supports the wider ecosystem."
As for the wider market, Svanstrom says the government needs to consider how the market transitions to the new taxes - with those who have recently paid stamp duty being at a clear disadvantage.
He said: "As we’ve seen around moments such as stamp duty changes, we could see some distortion in the market for properties at or close to the £500,000 mark if this does end up being the threshold, with movers at this price range understandably keen to avoid the new tax if they can.”
The rumoured changes don't seem to apply to buy-to-let properties, so Svanstrom says landlord supply shouldn't be impacted. He said:
“If under the rumoured proposals, buyers no longer pay added property taxes, it could make the transition from renter to first-time buyer a little easier. Five years on from the pandemic, rents have seen a 44% increase and average supply is 26% less, so renter access and affordability is very stretched. The rumoured stamp duty changes don’t appear to apply to buy-to-let properties, so we wouldn’t expect any immediate impact on landlord supply, although they face many other tax pressures adding to the concerns of adequate supply going forward in the market.”
While there are concerns about the impact of the new taxes and their impact - particularly the transitional period - the CEO stressed that it was 'encouraging' that changes to stamp duty were being considered as the current system could be 'improved or made fairer'.
He concluded: "Under this week’s rumoured proposals, there would appear to be some benefits to first-time buyers, but more consideration needed for the mass-market caught between two systems, and downsizers. The key question is whether these changes would actually generate more income for the government. It depends on the designs of reforms for taxes and fees, as well as the rates, but if they reduce mobility through these changes, they risk having the opposite effect and losing out in the long run.”
