There has been a rise in the number of calls to reduce stamp duty in line with housing market activity.According to experts within the property sector, the tax should accommodate those who are buying for the first time as well as those who are moving to a smaller home following retirement. At present, the high rates are discouraging many from doing so, especially when paired with the rising price of housing.
In addition to cost, Nick Leeming also cited supply to be a problem for first-time buyers. The chairman at Jackson-Stops & Staff highlighted that whilst paired with low mortgage rates this may be beneficial in terms of equity growth, it can act as a barrier for those in search of their first home.
He also drew attention to the most recent price index, stating that it illustrated a slight decline in property prices.
‘Prohibitive levels of stamp duty continue to have a profound impact on market fluidity for higher value properties. We will have to wait and see how and if the Government decides to tackle this.’
Also taking this view was Jeremy Duncombe, who commented on the numerous factors causing problems for potential first-time buyers. The director of the Legal & General Mortgage Club stressed the importance of a governmental review on stamp duty, stating: ‘Although house price inflation is at its lowest level in four years and beginning to align with inflation, lack of supply and the barrier of stamp duty is still leaving many hopeful first time buyers facing a mountain to climb,’ he said.
‘Increasing housing supply and addressing the possibility of a stamp duty exemption for first and last time buyers must remain at the top of the Government’s housing agenda.’
Calling for a stamp duty reduction to improve activity in the market was the broker, Aston Mead. Land and planning director, Adam Hesse, highlighted the negative impact of the tax, especially in the context of a first-home transaction.
‘Not only is stamp duty a tax on moving, it also reduces the supply of new homes. This in turn further contributes to Britain’s housing affordability crisis.‘
‘All the benefits of brand new properties make them very attractive to those starting out on the housing ladder, as well as those downsizing after retirement. But the abhorrent levels of tax for buyers in the top price brackets means that those owners can’t sell, thereby stifling the market. Meanwhile, for first-time buyers, it’s another few thousand pounds that they’ve got to find, at the point when they are making the biggest expenditure of their lives,’ he explained.
Whilst some have highlighted the reduction in revenue for the Treasury should a fall occur, experts have dismissed this concern. Hesse goes on to state: ‘Stamp duty is actually a very inefficient way of collecting tax revenue. It only produces maximum income for the Exchequer if there is a high volume of receipts. So a significant reduction in stamp duty would actually boost Treasury coffers by increasing activity in the housing market.’
