As the Autumn Budget draws ever nearer, calls for Chancellor Philip Hammond to shake up stamp duty laws are gathering pace. With some calling for stamp duty to be levied on sellers, others calling for it to be scrapped altogether, and everything in between, but with the revenue generated from this type of tax at record highs, are these suggestions realistic?
Since April 2016, stamp duty is paid at 2% on properties priced between £125,001 - £250,000, 5% on properties worth £250,001 - £925,000, at 10% for those between £925,001 - £1.5 million and those at the top end of the scale at 12%. Those buying second homes are then hit with a 3% surcharge, but with property prices on the rise, the cost of this duty is causing problems for those on every rung of the property ladder.
It is the burden of stamp duty, critics say, that has led to the huge decline in UK sales. First-time buyers are finding it exceptionally difficult to get onto the property ladder because they have to pay the tax as an upfront cost, together with a deposit, solicitors and surveyors fees and such like. Similarly, families are finding the costs of moving up the ladder into bigger homes too expensive and are choosing to stay put, meaning the pressure on the housing market is rapidly increasing.
One solution levied by the AAT (Association of Accounting Technicians) calls for stamp duty liability to be switched from the buyer to the seller. Claiming, in its Budget submission, that this would help more people get on the property ladder by reducing immediate upfront costs, help those moving up the property ladder which in turn would free up smaller properties for first time buyers and overall increase the amount of house purchases.
But what happens to those older people looking to downsize? Baroness Ros Altmann, former pensions minister, is calling on the Government to reduce stamp duty for downsizers and build more homes for “last-time buyers” thus freeing up properties further down the ladder. Baroness Altmann is the former head of Saga which has been levying the Government for years to impose a stamp duty exemption on downsizing into properties worth up to £250,000.
Residential Land chief executive Bruce Ritchie has another solution. He is calling for a temporary halt on stamp duty to restore confidence within the housing market stating, “We should have a moratorium on an immediate basis so the market can regain confidence and be allowed to grow” but recognises that “it is difficult to win an argument with politicians about tax if they have got more money in their coffers than before…” and that could be the biggest hurdle of them all.