A highly influential think tank says stamp duty should be scrapped for all house purchases once and for all.
Alexander Hammond of the Institute of Economic Affairs has told the Express newspaper that the duty causes so many distortions in the market the government should consider axing it.
He says: “Policies such as stamp duty land tax make purchasing a home more expensive and, as it penalises people moving houses, it acts as a disincentive for older people in bigger homes to downsize. Partly as a consequence of this distortive policy, more than 50 per cent of UK households are under-occupied.
“The stamp duty holiday for homes under £500,000 ended on June 30, however, the popularity of the policy coupled with harmful impact the tax has on our society means the permanent scrapping of stamp duty land tax should be considered.”
Hammond, who also wants a relaxation of planning laws regarding new house building, concludes in the Express by saying: “The unaffordability of houses today represents a colossal failure of government policy that is having a damaging impact on our society.
“A record 42 percent of adults under 34 live with their parents, a further 60 percent of those under 44 noted the high cost of housing has delayed them achieving big life goals such as marriage, and there’s even evidence that high house prices are adversely impacting the UK’s fertility rates.”
There are less than six weeks remaining before the end of the stamp duty holiday in England, which has been running for 13 months already.
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Moving home creates economic activity the benefits of which to society, far outweigh stamp duty revenue which, as it currently stands is a political, not an economic policy. The question is whether the government has the resolve to resolve this drag on all of us, I’m afraid I doubt it but here’s hoping
I can't imagine there is a single agent out there who didn't already know all of this. The government never listen, and so the predictable pointless tax continuum goes on...
If SDLT was to go, it would likely only be replaced by another property tax, so would the net difference be that great to grease the wheels of the market that much, I doubt it? Its not the main obstacle to home ownership either, house price inflation wins that prize and anyway, some mortgage arrangement fees are higher than many peoples stamp duty bills. SDLT I am afraid is here to stay as it’s an easy, relatively painless tax for government to levy and feels that way for most of the people that pay it, despite all the articles saying otherwise.
Firstly, for government, as most people paying it are home movers, it's an easy way to tap into the billions of untaxed property wealth sat in bricks and mortar which they want a larger slice of if anything. Most people fund the tax from equity that becomes liquid for that split second on completion before being tied back up in a mortgage lenders conditions. It's also not a raid on people's everyday cash flow like income tax, NI or VAT which is always far more unpopular and more universal in its application. The government no doubt feels entitled to its share of this wealth as its' economic policy in large part protects the housing market and as such helps to create this cash cow in the first place, as we have just seen with recent house price inflation. Home movers in the main accept this monopoly money created by increasing house prices is not of their doing, and if they need to pay a relatively small tax for its creation, then so be it, but of course will always protest about having to pay it. FTBs are shielded in the main.
Secondly, there is the realisation, that it's not a tax on the poorest in society who probably won't be buying a property even if they own one now, popular at the ballot box as a tax on the mobile middle classes. If you can afford to buy a property, you can afford the tax, it is seen as a privileged position to be in and performs extremely well on the "tax raised vs popularity with the man on the Clapham Omnibus" scale whose votes swing outcomes of General Elections not home movers.
whilst I don't like SDLT, in truth its difficult to argue against it based on the potential alternatives, fairness etc.
Thought your comments were very well put and balanced!
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