Stamp Duty Q2 2022
This morning at 09:30, the latest quarterly stamp duty statistics on residential property transactions were published by HMRC. We asked brokers and other property experts for their views.
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6 responses from the Newspage communityCopy all
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There's more chance of Donald Trump being the next UK Prime Minister than the Government scrapping stamp duty. This Government has already demonstrated they will increase taxes no matter the push back. The removal of stamp duty would see 14 billion in lost taxes according to the 2021/2022 figures. Where will that money come from The UK housing system needs a radical overhaul. It's splintered and fragmented in almost every area. Simply tinkering with taxation or offering a short-term fix only serves political agendas, and doesn't provide a long-term solution for future generations.
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I am fully behind the idea of scrapping stamp duty entirely to allow more mobility within the property market, as there are many people who are now refusing to move from homes that no longer serve them a purpose simply due to the hefty stamp duty bill they will incur even if they decide to downsize. Scrapping stamp duty for residential purchases would allow more first-time buyers to get onto the housing ladder and more needs to be done to build affordable housing.
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The move from the old "slab tax" system that used to be in place to the graduated tax we have now was already a massive move forward in terms of the way SDLT (Stamp Duty Land Tax) works and was very much welcomed. Since then, other factors have been introduced that do make it more complex, such as second home additional charges and exemptions for first-time buyers to a certain limit. The chances of any large-scale changes in the near future are slim. Scrapping it would remove a huge amount of tax revenue from the Treasury so is unlikely unless it is replaced by a new/increased tax elsewhere. The one area that could be a good move for the public, but less so for the Treasury, would be to increase the thresholds for each SDLT banding by the annual national house price growth each April; at present, the limits are reviewed very rarely and therefore the tax captures more and more people in the higher bands as house prices increase, but the tax bandings remain static. This is a trick called fiscal drag, which generates increased tax revenue each year, but without increasing the underlaying tax rate.
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Stamp duty land tax fees appear to do little to deter property transactions and they generate significant funds for the Treasury. The core issue is that we need more, affordable housing and that needs a long-term, joined up strategy that deals with greater regulation on the rental sector including its funding, further planning reforms and embracing more efficient construction technologies.
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I'm certainly in the 'scrap stamp duty unless you own multiple properties' camp. The cost of stamp duty simply wastes too much money for a lot of would be home sellers to contemplate moving. We want people moving around, moving into appropriate housing, whilst freeing up their property for someone best suited to buy that specific property. A healthy market is a fluid market but stamp duty scuppers that.
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The current levels of stamp duty seem fair. First-time buyers get a leg up with no SDLT on the first £300,000 and landlords and buyers of more expensive properties pay the most. Should it be replaced? Perhaps with higher rates of capital gains tax for additional homeowners to encourage investment away from property and into more productive asset classes, like businesses. But all those billions in stamp duty would have to be replaced one way or another.