Who will win the great housing tax war?

Who will win the great housing tax war?

The first strike came from Chancellor George Osborne, as he set out his arsenal of reforms to the Stamp Duty system in November 2014, slashing this tax for 98% of homes, but meaning an increase in tax for any homes over £1m.

Then, more recently the Leader of the Opposition, Ed Miliband revisited promises to implement a Mansion Tax, the proceeds of which would be plunged into the NHS, should they come to power at the forthcoming General Election.

Under its plans, Labour has said that most people who own homes worth between £2m and £3m will pay £250 a month in extra taxes. However, owners of homes worth "tens of millions" and second homeowners would pay much higher rates. Though what these rates will be, Ed Miliband is unwilling to divulge until the party has been elected.

However, while the debates currently rage about economic inequality and how property taxing might be the shot in the arm for this, it is important to analyse what other repercussions such legislation may have.

Locally in Kent and especially at our developments, we have been seeing a renewed vigour in purchaser acquisition with many buyers taking advantage of the reductions in Stamp Duty. At one of our sites particularly, Scape in Whitstable, we have seen three properties reserved off plan in quick succession and significant interest in the remaining two properties, even though the build is still underway.

Despite rumours of a slowdown, this is not something we are experiencing. The Stamp Duty announcements have brought even more potential sellers and purchasers to market, especially those with properties just over £250,000 previously held back by the hefty Stamp Duty levies, but who are now taking this opportunity to move on.

Competitive mortgage rates are also playing their own part in creating buoyancy within the Kent property market, as although approvals may be difficult to obtain, they are definitely worth the hassle, as mortgage rates as low as 0.99% are being offered by certain banks.

The forthcoming General Election will no doubt bring further reform to the property market. However, it remains to be seen whether this will be in the form of a Mansion Tax, which could have market-wide and nationwide repercussions. By dampening the top end of the market further, it may mean that buyers can no longer move up the chain and therefore stunts growth below it.

Such an effect could be devastating for the housebuilding trade and to the national economy, especially when we are in the midst of a housing crisis, with a supreme need for new quality housing stock. Such measures therefore need to be implemented with extreme caution from whichever party wins the election and the housing tax war.