Conservative Party leadership contender Boris Johnson has confirmed his interest in switching Stamp Duty liability from the house buyer to the seller.
The switch has been proposed over the years by a number of critics of the existing system, including the Association of Accounting Technicians.
Johnson has now met with the AAT and agreed to examine their Stamp Duty recommendation further, requesting further information which has subsequently been provided.
Phil Hall, AAT head of public policy and public affairs, said: “We are naturally pleased that Boris has agreed to look at our long-standing proposal to switch Stamp Duty liability from the buyer to the seller.
“This will save the taxpayer £700m a year by rendering the exemption to first-time buyers redundant.
“It will also protect the £9bn of revenue that Stamp Duty generates as it will still be paid in full, simply by different people. It’s much more progressive too, as it will be paid on the lower priced property being sold, rather than the higher priced property being bought.”
Johnson has already suggested that he would scrap Stamp Duty for homes worth £500,000 or less, prompting concerns that this could stall transactions if he does become the next Prime Minister, while buyers decide to wait and see whether it would be worth their while to hold on.
Comments (28)
This is a very sound idea. Sellers have made all the money (tax free) on house price appreciation. Take the tax away from buyers and the housing market will be back on its feet.
Genius idea.
Mr Vendor you now have to cover stamp duty cost on the sale of your property; what you want to increase your asking/ selling price by an amount to cover this proposition. Excellent news, that will stimulate the property market by increasing the sale price of your 500k instruction to 515k overnight.
Also, it will help all of those nice national homebuilders who offer to pay the stamp duty as a deal sweetener already, they would need to offer a further incentive to stay ahead of the curve, which of course would be absorbed in even higher selling prices, brilliant ideas, sounds like a real stimulus to the industry, has Boris or his advisers ever thought about asking estate agents for their views?
So if a seller only has enough equity/savings to cover their fees and deposit for the next purchase, they can’t move!?
Another stupid suggestion from a government that is out of touch with reality and what goes on in the real world of selling, buying and renting properties.
And in today’s system if they only had enough money for Fees & Deposit they couldn’t move because they wouldn’t have enough money for Stamp Duty for the onward purchase.
It is much better to pay the tax on sale. Most buyers have a related sale so they will pay less when moving up market which is at the point in life when money has more value. When trading down in most cases you have had the benefit of the increase in value and therefore equity. If it is applied to all sales at all price levels then it is a much more equitable tax rather than the current system that penalises high value locations.I am sure it is not beyond the scope to have some form of falling value relief to give some help to people in negative equity.
The big bonus is that House builders will have to pay it as at the moment the current system is skewed in their favour particularly if they are concentrating on lower value sales below the stamp duty threshold. Buyers not having to pay stamp can afford to pay more for the property and if they also are also on help to buy scheme they can pay a bit more again. You only need to look at the vast profits house builders have made in recent years.
In the case of large volume housebuilders they are quite likely to be paying all or at least a decent proportion of the buyers stamp duty in areas of high competition. They would be able to swallow it without too much struggle. On the other hand the regional housebuilders and smaller where the burden of getting more houses built really falls will find it hard to swallow where margins are finer. Another example of government housing policy contradicting itself. Don’t see it happening just AAT looking for some publicity to justify their existence.
Only the AAT think that they have come up with a gem. They have been floating this ideas for ages. It doesn’t stand up to any scrutiny.
Just another silly proposition from a group who have no understanding of the dynamics of the UK residential property market.
And when Mr Johnson has finished “adjusting” the tax regime perhaps he would be good enough to assist me in moving a few deckchairs?
I am not sure he is ready for the promotion to moving your deck chairs.
Abolish SDLT altogether. A tax on moving is iniquitous.
Especially when all tenant fees have just been abolished! Let us treat Owner Occupiers in the same manner as Tenants, abolish all fees including (especially) SDLT and mortgage fees.
Has anyone checked the tenant fee ban wording to see if buying a leasehold house as a tenant where the freeholder is the landlord causes such a situation?
Management companies might be in a wee pickle too!
Or maybe split the duty between both parties?
Some of us remember the days of rising interest rates and falling house prices leading to many in negative equity. This idea would leave many high loan to value first time sellers in a precarious position and would reduce the LTV lenders would offer. It would also hurt pensioners looking to downsize and release equity.
I suspect you may be right Eric. In recent years the boom and bust property markets have been protected by the BTL market smoothing out the peaks and troughs. As investors are driven away by the wholesale landlord bashing it is likely a more volatile housing market will return. With this will return the risks of negative equity.
In my opinion i think it’s unlikely that any mortgage company would be happy with this without adjusting deposit levels. Where the buyer used to pay a 10% deposit, they may now need a 13% deposit, so the change will affect nothing much, except to make houses look more expensive. Mortgage companies may even inflate what they think the stamp duty will be, to cover themselves fully, making it worse for buyers.
maybe banks won’t mind giving great interest rates at (what is effectively) a reduced deposit amount, but that’s just cheap credit to the rescue, which we all know doesn’t end well.
If Boris lowers tax then great! Putting off a purchase should not be advantageous (unless the sale was negotiated before, but completed after the change) because afterwards the sale price will just go up by the saving amount, so no need to panic about anyone holding back to wait and see.
This is very perceptive Undercover Agent. Of course banks will raise deposit levels due to SDLT coming off the top in the event of a forced sale. And, as we know, deposits, especially among FTBs are the problem. The increased deposit required would likely be far greater than the current SDLT for FTBs which in many cases is nil. What about SDLT on the (inflation-adjusted) uplift since buying a property? That would prevent house price hikes, and there would be less of an issue of being unable to pay SDLT in the event of negative equity/down-valued repossession. More people could afford to buy and sell in a more price-stable environment.
So a bunch of accounting technicians know the property market better than property professionals. The world is full of self proclaimed experts. If you want more mobilty and affordability abolish this punitive tax.
So rather than the buyer paying the tax to government, the seller adds the amount to the selling price, the buyer pays more for the house and the seller pays the tax over to government?!
And that helps how?
its like the sales version of the TFB.
TFB?
When new listings are at low levels, charging vendors to sell is really going to help isn’t it?
The Government are as clueless as ever when it comes to the housing market?
Why not split the Stamp Duty between both parties?
just a thought…..
This will lower the cost of upsizing , I think it would help stimulate more people to move
But is likely to discourage down-sizing. If fewer properties are marketed it could block the market as many older people will see they can avoid the tax by staying put.
No new ideas sadly. Time for a general election.
Then we can elect Cor-bin with all his new “progressive” ideas..
Sounds good for people who have equity…absolute blood bath if market ever turns and sellers can’t pay the duty out of their equity.
Stupid idea. Investers should still pay it.
Just carry on as we are hey. Hope it gets better.