Land broker Aston Mead has backed calls for a reduction to stamp duty across all property price brackets in order to boost the level of activity in the UK housing market.
Writing for The Telegraph earlier this week, Tory MP Jacob Rees-Mogg insisted that stamp duty must be slashed “as a matter of urgency” as part of a return to Conservative values if the party is to win the next election.
Rees-Mogg’s views are supported by many property professionals, including investors, who believe that a reduction in the levy paid by those buying property would increase the number of homes changing hands.
Aston Mead Land & Planning Director Adam Hesse said: “Not only is stamp duty a tax on moving, it also reduces the supply of new homes. This in turn further contributes to Britain’s housing affordability crisis.
“All the benefits of brand new properties make them very attractive to those starting out on the housing ladder, as well as those downsizing after retirement. But the abhorrent levels of tax for buyers in the top price brackets means that those owners can’t sell, thereby stifling the market. Meanwhile, for first time buyers, it’s another few thousand pounds that they’ve got to find, at the point when they are making the biggest expenditure of their lives.
“All of this means that people often continue to rent when they would rather buy, or they remain stuck in a property which is either too big or too small for them. It’s utter madness!”
Hesse also believes that lower rates of stamp duty are likely to increase the tax take for the Treasury.
He explained: “Stamp duty is actually a very inefficient way of collecting tax revenue. It only produces maximum income for the Exchequer if there is a high volume of receipts. So a significant reduction in stamp duty would actually boost Treasury coffers by increasing activity in the housing market.”
His comments follow the publication of a report by the London School of Economics (LSE) and the VATT Institute for Economic Research, which indicated that stamp duty reduces the rate of house moves by nearly a third, preventing large homes from being freed-up for young, growing families.
Hesse added: “People pay for their single largest asset with money which has already been taxed once. Understandably, they resent having to pay through the nose again, simply to be able to move.
“Before 1997 the rate of stamp duty on the most expensive homes in the country was just 1%. Twenty years later that figure has gone through a 1,100% hike to an extortionate 12%. The problem is that as soon as you discourage activity at the top of the market, every other price band slows down as well – and some of them have ground to a halt.
“So no one is realistically expecting a return to the 1% rates seen two decades ago. But a radical overhaul of the system is unquestionably what’s needed in the Autumn Budget, to allow Britain’s property market to flourish once again.”