Newspapers ramp up pressure for further reform of stamp duty

Stamp duty has become the latest weapon in the ongoing war of words between different wings of the Conservative party, as newspaper readers will have seen over the weekend.

In The Daily Telegraph, Alex Morton - a housing and planning adviser to the Coalition and Cameron governments until 2016 - writes that the various stamp duty reforms between 2014 and 2016 were “to limit rising house prices to stop falling home ownership.”

With this objective, he says it is justified to reform property taxes including basic stamp duty, the surcharge on additional homes and phasing out mortgage interest tax relief for landlords. 

“Prices are more stable” he says, suggesting this is evidence of the reforms’ success.

But he says there was one mistake. “Stamp Duty was cut moderately for some and increased for others. It should have been cut more comprehensively for people purchasing their home and not increased from what were already by 2014 very high rates at the top.”

Morton then goes on to call on Philip Hammond, the Chancellor, to cut stamp duty by two per cent across the board - which means the average first-time buyer would not have to pay any stamp duty, and hundreds of thousands may be saved by purchasers of the most expensive properties in London.

In his most recent budget on behalf of the Theresa May government, in the spring, Hammond said he was aware of arguments concerning further reform of stamp duty and was mindful to investigate them further - but felt no action was required at the moment.

In the past financial year, the Treasury has netted £11.7 billion from stamp duty in England, Wales and Northern Ireland - some 10 per cent higher than the previous year, despite a dip in housing transaction volumes.

Meanwhile in The Times over the weekend, it was suggested that buyers could be overpaying billions of pounds a year on stamp duty because of widespread errors in the way the tax is calculated.

In an interview with the newspaper David Hannah, the founder of the Cornerstone Tax consultancy, claims properties are frequently classified as residential when they are mixed-use or commercial, or subject to other complex exemptions that could significantly lessen the amount of stamp duty due.

The newspaper claims that as many as one in six property transactions could be being calculated incorrectly by solicitors — potentially at a cost of £2 billion — because the stamp duty system has become too complicated and lawyers are often inadvertently given the wrong information about properties.