Stamp Duty should be replaced by a seller’s tax – effectively meaning that it would transfer transaction tax costs from buyer to vendor.
The call has come from Yorkshire Building Society, ahead of the Autumn Statement in November, which says that it would make it easier for first-time buyers to get on the property ladder.
Using its own mortgage lending data, the lender claims that changing property tax rules in this way would save first-time buyers in the UK, excluding Scotland which has its own rules, an average of £3,791, with Londoners saving the most at an average of £13,171.
The lender claims transactions would increase by 2% based on the increase in transactions during the 2009 first-time buyer Stamp Duty holiday.
The lender suggests new-builds for owner occupation could be exempted from the rules – so buyers of new homes would still have to pay the tax.
Andrew McPhillips, chief economist at Yorkshire Building Society, said: “More than 200,000 first-time buyers paid Stamp Duty last year, and removing this tax burden from them would give the younger generation a major leg up the property ladder. This would be felt most of all in London where on average our members pay a staggering £13,171 in Stamp Duty for a first home.
“The benefits would not only be felt by those looking to get on the property ladder as anyone moving up it would be better off too.
“The Prime Minister has pledged to make intergenerational support a key measure of her Government’s housing agenda and this measure could achieve exactly that.
“This will not solve every cause of the housing crisis but reforming Stamp Duty could ease its effects by making homes more affordable.”
There would be a few other issues to iron out. First there would need to be a cut-off so that those who have already paid Stamp Duty don’t get caught out. Then there is a risk of sales dipping in the run up to any new regime.
EYE also asked what would happen to those selling for the last time, for example because of moving into care, and a spokesman responded: “The proposal as it stands would apply to all sellers, including these groups; however, the Government could apply exemptions for specific groups if it feels they would be unfairly disadvantaged by the proposal.”
Comments (13)
In days of your the stamp duty tax only affected more expensive property, it now affects virtually everyone as the threshold figures are far too low and have not been related to property inflation.
Scrapping SDLT would be a mistake. The result of buyers having more cash to spend would be house prices rising – we saw the exact same thing in January 2014 when Help to Buy 2 got up and running.
If the aim is to get more FTBs on the property ladder, but more properties cannot be built at a faster rate, then (sadly) more needs to be done to prevent BTL investors from snapping up stock. The 3% SDLT surchare has been effective, but I disagree with landlords and ‘accidental landlords’ being taxed any more.
Maybe give FTBs exclusively another Stamp Duty holiday as we saw in 2009.
And why should new builds be exempt? I do not understand the thought process behind this report.
I wonder if the Yorkshire building society have ever experienced borrowers with something called NEGATIVE EQUITY ?
Idiots !
Do away with SDLT.
Introduce Capital Gains Tax on primary residences. Result – ends using property as a speculative commodity, moderates price rises, reduces volatility in the market.
(I shall now duck below the parapet).
They won’t EVER get rid of it, due to it being such a money spinner.
The stamp duty reform as of the end of 2014 helped, with an average saving of £3500.
It’s the BTL stamp duty and 2nd property owner tax that’s killed things. But the media spin it away from this and use brexit as a smoke screen.
They just need to do away with the 2nd property tax and stamp duty jumps for investors.
Stamp Duty does need to change, if we stay with the current system the upper thresholds, where the higher rate of Stamp Duty kicks in needs to be increased and the second home surcharge needs to be abolished. I’d suggest it would be fair for the cost of SDLT to be shared between purchaser and sellers.
There is little doubt that stamp duty needs to be reformed but not at the cost and uncertainty of reinventing the wheel.
Keep it simple and revert to the tried and tested model that worked well for many years, on a sliding scale basis that is easy for all to understand, starting with say Zero up to £200,000 with a maximum of 5% over £1m at the top end.
It was only when the Chancellor decide to “tinker’ with the percentages some years ago that stamp duty really became an issue. The liability should also stay with the buyer as with the stock market.
It seems you have to be somewhat challenged to be a chief economist. The answer is to remove stamp duty completely on property under £1,000,000. Place it on sellers and you still stop the market as sellers will have a tendency to not sell if they have to pay a large amount of tax. This in turn will reduce supply at any given time and and drive up values due to restricted supply. For those poor soles who purchased and paid stamp duty would then be double taxed, nice one Yorkshire Building Society!
Stamp due is the glue that causes property to not sell and be bought so readily thus reducing up sizing and down sizing.
Assuming most sellers are also buying they simply pay on their sale rather than purchase. Also, assuming most chains are made up of people upsizing, the amount they pay on their sale will most likely be less than the amount they pay on their purchase so, all in, I don’t think it would be an issue for sellers apart from perhaps downsizers/probate.
Maybe agents should think about a change in fee allocation… start charging the buyer rather than the seller and all of the onliners will disappear over night.
I think Will meant that if Govt took Yorkshire B/S’s advice, every homeowner in the country (who paid SDLT when they completed) would then get lumbered with another tax bill when they came to sell the very same property.
In my opinion, making the buyer an agent’s fee-payer will create a conflict of interest. It could also result in uncompetitive rates, similar to the tenancy fees that are under review (not forgetting that tenants need reference and credit checks before move-in).
I appreciate some of the issues that may come in to play if agents charged the buyers a fee but it already happens on a regular basis in my area as a number of agencies occasionally use this approach, including Your Move.
Douglas Allen and haart, too – and they made a lot of money out of ‘Sale by Tender’. Surprised they got away with it for so long and that so many homeowners did not see they were losing out, but that is a whole different subject.