New Prime Minister Liz Truss has been urged to consider a tax overhaul to boost property supply.
There have been plenty of ideas put forward in recent days on how Truss can support the housing market.
David Hannah, group chairman of Cornerstone Tax, is the latest to put forward suggestions, highlighting that the housing sector is suffering from “regulatory blocks and red tape” that delays construction.
He has proposed a series of tax breaks to support property development, including a stamp duty holiday.
Hannah said: “The government could consider soft loans to developers to help accelerate house building programs. Fundamentally, what the government could do is to cut taxes.
“The corporation tax increase that was proposed by the previous chancellor and the previous prime minister looks likely not to happen, however, a special corporation tax rate for the next three years for developers, provided they construct housing up to an acceptable number and standard, could be provided.
“Truss could consider a short-term cut in stamp duty, which is a real cost to developers and home buyers, or even a stamp duty holiday for developers buying sites, provided they can commence construction on them immediately.”
Hannah also suggests all planning restrictions should be removed on green renovations on homes, whether new or existing and including listed buildings, adding: “There should be a zero VAT rating for energy efficiency initiatives, so that the country can move towards its carbon emissions target whilst at the same time stimulating the building industry at a time of national uncertainty and looming recession.”
Addressing the end of the Help to Buy Equity Loan Scheme in October, Hannah has suggested lower-price dedicated first-time buyer mortgages.
He said: “By fixing the interest rate for three to five years at or slightly below the base rate of three or four percent, it will give first-time buyers the predictability needed to know that they can afford their mortgage payments for the first few years.
“This means that, if property prices keep rising, there will be no danger of them falling into negative equity because whilst their mortgage amount will have remained fixed, the value of their property will have gone up.”
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Alternatively,
Let the market finds its own level. Stop faffing and allow a free market to interact with supply and demand.
Y'know, how we did things before 2008.... We had central banks and governments who reacted to what happened. Rather playing mystic meg in response to media and business lobbying from those addicted to stimulus.
The answer to property supply is reduce stamp duty. The rate should go from nothing up to £500K to a max of 5% including the 3% surcharge on investors. This measure would stimulate the market, increase supply and the economy generally and more than pay for itself. Truss (Theresa) May as well do it, in for a Penny (Mordaunt) in for a pound
Feel free to publish the study data and the maths to support that position.
Starting with the stamp duty revenues calculated as an average per transaction through the stamp stimulus period, then adjusted for house prices versus say 2017/18&19 would be a good start.
I assume you'll be able to clearly show the revenue per transaction streaked ahead?
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