This week, the nation’s largest building society has called for the government to reform stamp duty in order to make the home buying system fairer, as well as encourage residential property transactions within the UK.
Recent Bank of England data shows further slowdown in mortgage lending, as with many other official reports. Approvals have reportedly dropped within the last 4 months successively to 59,426, which is the lowest level observed since June last year. 2014 saw transactions peak in January at 76,574, meaning there has been a 22% decline since the start of the year.
This plummet has been put down to stamp duty burdens amongst home buyers, so ahead of tomorrow’s Autumn Statement, Nationwide have written to George Osborne demanding that tax thresholds need to be increased in order to encourage the property market to gain traction.
The last increase on the 1% stamp duty threshold was introduced in 2006, which currently applies to properties below £250,000.
According to reports, had the thresholds remained in line with property prices, it’s estimated that the 1% tax band would be raised to a threshold of £145,000 and over. The 3% threshold would then be at £295,000 (currently £250,001 to £500,000), and 4% would be incurred on properties valued at £590,000 and over (currently £500,001 to £1 million).
Nationwide claim there are also problems with the way the duty is calculated. Its experts say that the tax bill should be applied to the amount that a house price is over the threshold, rather than on the entire cost of the property.
Chief Executive at Nationwide, Graham Beale, says with the current structure the average buyer would be looking at paying nearly £2,000, which will then inflate significantly on houses over £250,000.
Mr Beale adds that the current slab structure discourages home owners from moving, and new thresholds and billing scales should make stamp duty clearer and fairer across the board. He went on to state that this will not have a great effect on revenue, as the bulk is gained from high value properties.
It remains questionable as to whether Mr Osborne will cover the property market in this week’s Autumn Statement. However with housing being a political focus in recent months, it is probably worth keeping attune to tomorrow’s occurrences.
