Thinktank Corroborates And Costs Boris Johnson’s SDLT Changes
A Conservative thinktank has backed Boris Johnson’s proposed stamp duty land tax (SDLT) cuts and claimed they could be cost neutral to the government.
The report, published by the thinktank Onward, claims that the next Prime Minister, Boris Johnson, should help more than three quarters of a million home buyers by abolishing SDLT on all property apart from the most expensive 10%.
The proposals echo Boris Johnson’s policy plans to take all homes valued below half a million pounds out of SDLT obligations. Onward have predicted that this would help 770,000 save money on their home purchase.
Whilst Boris Johnson pledged to return stamp duty for prime property to levels set before the changes were made in 2015, Onward aim to further help primary residences above £500,000 by halving the current SDLT. This would mean most prime home buyers will be saving an additional 1% on their stamp duty obligations compared with pre-2015 levels.
The thinktank speculate that SDLT changes will cost around £3.3 billion per year in lost tax receipts. An amount they can accrue by amending the taxes paid by other stakeholders in property.
Under the proposals any home left empty for more than 6 months will have a 1% tax imposed on it, raising £645 million per year.
Second homes and investment properties will see their SDLT surcharge increase from 3% to 5%, accruing £790 million in the process. However, this will not be popular with landlords who already feel victimised by the current surcharges being imposed on them. As landlord numbers are already dropping, this tax could lead to a more widespread exodus.
Additionally, non-UK residents will see their current surcharge raised further, more expensive properties will see their council tax increase and council tax relief on vacant homes will be abolished.
In total, the thinktank estimate that they will be able to make £3.2 billion in popular property taxes making the SDLT amendments virtually cost neutral.
Chris Philp MP, co-author, said:
“It is essential that the next Prime Minister takes early action to back home ownership and tear down the biggest barrier to hardworking people getting on the property ladder by radically cutting stamp duty.
“These stamp duty cuts are designed to kick-start the home ownership dream – just as Thatcher did in the 1980s. 86% of the public want to own their own home, yet only 63% do. They will help first time buyers, down-sizers, up-sizers and people needing to move for work.
“These reforms will get the whole housing market moving – and help make sure we are making the best use of housing stock by making it easier for older people in large houses to move, allowing growing families to move in.”
Will Tanner, Director of Onward, says:
“Stamp duty is a bad tax. It creates friction in the housing market, preventing people from buying their first home, moving for work, or downsizing to free up housing stock for families.
“The next Prime Minister should be bold: take all but the most expensive properties out of stamp duty and pay for it with fairer taxes on empty, foreign or expensive properties. If they don’t, the Conservative dream of a property owning democracy will get further and further away.”
How will these changes impact the property market – will they deter investors and foreign buyers? What impact would these changes have on the private rental sector? Will these SDLT changes help stimulate the property market?