Homebuyers left disappointed as a Budget stamp duty cut fails to arrive, but delayed hike for foreign investors may trigger a mini-London boom

Homebuyers left disappointed as a Budget stamp duty cut fails to arrive, but delayed hike for foreign investors may trigger a mini-London boom Chancellor decides against stamp duty overhaul this afternoon in 2020 Budget Property taxes due to bring £12.8billion into the Treasury's coffers this tax year He confirmed a 2% surcharge would apply to foreign buyers next year Home buyers were left disappointed today after a hoped-for stamp duty cut failed to materialise in the Budget.

Stamp Duty stays the same for UK Buyers 

There had been speculation that the Chancellor could tweak the tax to help stimulate the housing market. However, Chancellor Rishi Sunak chose not to include any stamp duty changes for UK buyers. Instead a 2 per cent surcharge was announced for foreign buyers. But with the hike not due to arrive until April 2021, Budget forecasts showed that the Treasury expects a spike in purchases before that, which could lead to a mini-London boom. Currently, anyone buying a property that costs more that £125,000 and who isn't a first-time buyer has to pay stamp duty and high rates at the top of the housing market mean some purchasers can pay huge sums.

The stamp duty bill for a £500,000 home is £15,000, rising to £43,750 for a £1million home and £93,750 for a £1.5million property. High tax rates have hampered home sales in expensive areas, such as London and the South East, and critics say this trickles down to affect transactions further down the property chain. Previously, it was believed that the Conservatives could radically reform the controversial tax by raising this threshold to as much as £500,000. These plans were dropped from the Tory's manifesto last year and despite hopes that they would be slipped back into the Budget, stamp duty rates remained frozen. The Treasury did however use the Budget as an opportunity to make good on a manifesto commitment to introduce extra stamp duty on UK homes bought by foreign buyers. The Chancellor confirmed that from April 2021 a 2 per cent stamp duty surcharge will apply to overseas buyers.

The money raised from the surcharge, he says, will be used to help address rough sleeping. Budget documents forecast a sharp £250million rise in stamp duty income in the year before the extra tax arrives, indicating that a spike in purchases is expected from buyers trying to beat the deadline. With most overseas purchasers buying in London, this could spell a mini-boom for the capital's housing market. However, a slump could follow that, with Budget documents forecasting a £355million decline in stamp duty income in 2021 due to the change. According to the Budget document, property transaction taxes - including Stamp Duty - will bring in £12.8billion in the 2019/20 tax year.

This will rise to £18.7billion by 2024/25. Currently, some 61 per cent of receipts are generated in the South East and London. Mary-Anne Bowring of residential property consultancy Ringley, said: 'The falling pound has made housing more affordable to overseas buyers, while domestic buyers have had to contend with stagnant wage growth and ultra-low interest rates pushing up prices and eating away at their ability to save. 'An increase stamp duty for overseas buyers will simply put things back to where they were before the Brexit vote and level the playing field for domestic buyers.'

Housing Market Bounces 

The housing market saw a significant bounce in the lead up and immediate aftermath of the general election, with mortgage approvals for homebuyers soaring to their highest levels in four years in January. But there are concerns that as coronavirus cases step up in the UK house hunters will stay home, potentially having a chilling effect on the market. Estate agent Jeremy Leaf said: 'The housing market recovery has been hit by a double whammy of the virus and falling markets. 'The recent rise in sales, prices and mortgage approval numbers was unlikely to be maintained even by a giveaway Budget and cuts in already rock-bottom interest rates.

'Our viewings are down by about 25 per cent on what we might expect at this time of year although there is no real sign of previously-agreed sales collapsing although mortgage deals may need to be renegotiated. 'The extension of the affordable homes programme, lower lending rates for social housing and release of monies from the housing infrastructure fund are all welcome but it is disappointing that there was no action to improve the relatively low level of transactions. 'In particular, apart from the 2 per cent surcharge on non-UK property buyers from next year, there was no action on stamp duty. 'An opportunity was missed to improve accessibility to the market for first-time buyers and downsizers who are causing a log jam at the top and bottom of the market.

This would have improved activity, which is good for the whole economy.' The new decade may have started with a renewed sense of optimism in the property market but dramatic rises in house prices are unlikely, experts have warned. Instead, economists have mostly forecast a steady 2 per cent rise in annual average property prices over the course of the year. Lawrence Bowles, of estate agents Savills, experts prices to rise by just 1 per cent over the course of the year. Broken down by region, Savills expects the North West and Yorkshire to have the fastest house price growth over the next five years.

This is partly because house prices in these regions didn't recover as quickly as in the South following the financial crash, meaning there is more room for growth. The Royal Institution of Chartered Surveyors was slightly more optimistic about the potential for national average growth over the next year, forecasting a rise of 2 per cent. Rightmove also predicted that the average price tag on a home will increase by 2 per cent over the next year, with northern regions performing more strongly than those further south. EY Item Club has also predicted a 2 per cent rise, while Yorkshire Building Society forecast a rise of between 0 and 2 per cent, and Halifax forecast a rise of between 1 and 3 per cent.