Dithering is damaging.
The recent announcement about vehicle excise duty has damaged the car resale industry.
The value of vehicles that may be in a very high tax band has fallen. If your car MAY be in a high tax band, but may not, depending on the final decision.. would you sell it or hang on?
If you are a dealer with a forecourt full of Ford Focuses that MAY now have a VED of £150 more than a rival car are you selling many?
People without information and feeling uncertain will wait and see so a slowdown is automatic.
Today there is a bungled non denial non confirmation from the Chancellor that there may be a cut in Stamp Duty,may be a suspension, maybe a deferment in some cases or maybe nothing.
The housing market, already in deep deep trouble, will now glide to a halt as purchasers who are already wondering if they should wait a bit longer for lower prices, now believe that possible savings on tax can be had.
Stamp Duty of 1% on the average price home of £100,000 is a £1000 saving. Not bad if you are struggling for the £5000+ deposit. On a £300,000 home its 3% or £9,000. Would you give that up to HMG if you may not have to?
The problem isn't whether its a good or a bad idea to alter stamp duty, to allow the market to stabilise or to reinvigorate falling tax receipts by offering a discount to First time buyers.
The issue is this damaging and politically motivated method of government whereby change is 'hinted' at to either reassure, float an idea, shore up support or destabilise an opponent.
We strongly believe that any announcement is being held for the coming Labour Party Conference, probably with a further hint on vehicle excise duty and any other good news that can be found. That may make good political sense but shocking and damaging economic sense.
Anyone remember what happened when a previous chancellor pre-announced that he had some gold that he was thinking of selling?
(Above: Badger and Broon 'assist' the UK housing market)
The recent announcement about vehicle excise duty has damaged the car resale industry.
The value of vehicles that may be in a very high tax band has fallen. If your car MAY be in a high tax band, but may not, depending on the final decision.. would you sell it or hang on?
If you are a dealer with a forecourt full of Ford Focuses that MAY now have a VED of £150 more than a rival car are you selling many?
People without information and feeling uncertain will wait and see so a slowdown is automatic.
Today there is a bungled non denial non confirmation from the Chancellor that there may be a cut in Stamp Duty,may be a suspension, maybe a deferment in some cases or maybe nothing.
The housing market, already in deep deep trouble, will now glide to a halt as purchasers who are already wondering if they should wait a bit longer for lower prices, now believe that possible savings on tax can be had.
Stamp Duty of 1% on the average price home of £100,000 is a £1000 saving. Not bad if you are struggling for the £5000+ deposit. On a £300,000 home its 3% or £9,000. Would you give that up to HMG if you may not have to?
The problem isn't whether its a good or a bad idea to alter stamp duty, to allow the market to stabilise or to reinvigorate falling tax receipts by offering a discount to First time buyers.
The issue is this damaging and politically motivated method of government whereby change is 'hinted' at to either reassure, float an idea, shore up support or destabilise an opponent.
We strongly believe that any announcement is being held for the coming Labour Party Conference, probably with a further hint on vehicle excise duty and any other good news that can be found. That may make good political sense but shocking and damaging economic sense.
Anyone remember what happened when a previous chancellor pre-announced that he had some gold that he was thinking of selling?
I can't believe how idiotic they are. Now the heat is out of the market, unless you *have* to buy this summer, there is nothing to lose by waiting. Sales will fall to zero.
ReplyDeleteyep. typical governance via behind the scenes briefings and leakings. this nonsense just turns people off as they think its all talk, and when it does happen, nobody cares because its filtered out as old news.
ReplyDeleteeither do it now or STFU until a real announcement is to be made.
[places head in hands]
ReplyDeleteI can't believe how idiotic they are.
ReplyDeleteI have no problem believing in how stupid this government is. I despair at the thought of how this has gone on for so long. Isn’t there something that could be done to bring it to an end?
The Labour Party Conference in the autumn gives me a very bad feeling. Just what are they going to announce at their rally. As they become more insecure about their hold on power the more dangerous they will become. Be prepared for a sequence of increasingly insane, damaging and scary plans.
I fear that the New Labour regime’s fall from power is going to be very messy and a lot of innocent people will get hurt.
Does this mean that if they were to announce an increase in stamp duty for the New Year, the market would suddenly spring into life?
ReplyDeletean interesting point of cause and effect Dearime. However the Tories tried this in 1992 and it was detrimental to the market.
ReplyDeleteNot only are labour reduced to copying old Tory policies, they are even copying the bad ones.
Re Tim H, perhaps we can expect an announcement on poll tax at the conference....
dearieme
ReplyDeletePretty much. There is precedent with Chancellor Nigel Lawson's decision to abolish MIRAS in 1988 - a mortgage relief scheme which saved homeowners thousands on their payments. This pushed up prices as buyers rushed to snatch up a property before the tax break disappeared.
Well said Blue Eyes. People who were thinking about buying will now wait even longer, meaning that sales will fall even faster than before.
ReplyDeleteWhat a bunch of idiots. When they announce something, it goes wrong. Now it goes wrong when they don't announce something!
Why don't they give a free garden shed to every first-time house buyer? Then they'll have somewhere to live if it all turns sour.
ReplyDeleteIts not so much the end of stamp duty , which would be a good thing , as the idea of a holiday isn`t it .
ReplyDeleteWhy is it bad that peprty prixces are falling anyway. This is one of the few good things in an otherwise terrifyingly inflationary enviroment
Well spotted. Tory chap Philip Hammons said the same thing.
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