Stamp-duty reform "credit positive" for housebuilder Taylor Wimpey, says Moody's

8th Dec 2014 11:20

Moody's Investors Service has said that last week's reform of the stamp-duty system in the Autumn Statement is "credit positive" for Taylor Wimpey and a number of other housebuilders.Chancellor George Osborne announced last Wednesday a major overhaul of the stamp duty land tax (SDLT), which means that around 98% of house buyers will be better off.SDLT will no longer be a direct percentage of the total purchase price, but will instead be calculated based on a series of progressively increasing tax rates applied to different price bands."The reform is credit positive for UK homebuilder Taylor Wimpey (Ba1 stable) because most of its customers will benefit from the savings and will be able to redirect the available funds toward a higher purchase price, although the market will likely adjust over time," said analyst Maria Maslovsky.She said that Taylor Wimpey's average selling price on private completions was £224,000 for the first half of 2014 so the majority of its customer base will benefit from the SDLT reform, which is aimed at helping the lower-end of the market."Greater demand, more efficient pricing and customers' ability to pay more will increase both Taylor Wimpey's revenues and profits since there are no costs associated with this change," Maslovsky said.She also said that the government's move will also remove the "artificial cluster" of houses priced just below the old tax-rate thresholds, such as £250,000."With the change in the law, house builders will be able to differentiate their product and price it more efficiently," she said.Taylor Wimpey's shares were down 0.3% at 137.05p by 11:12 but have still risen over 5% since the Autumn Statement announcement.