09 Aug Stamp duty exacerbating housing crisis and impacting economic growth
A report from the London School of Economics and the VATT Institute for Economic Research, found the rate of home moving would be 27 per cent higher if the levy was completely abolished.
Stamp duty on a £600,000 home would cost £20,000 at the current rates and £143,000 on a £2m property, putting of potential sellers looking to downsize. Professor Christian Hilber, who co-authored the report told the Daily Telegraph: “The key message of our paper is that stamp duty hampers mobility significantly.
“If you are a young family and you have an additional child, you’ll need an additional room, but the stamp duty is discouraging this kind of move because of the additional cost and lack of available homes to move into.”
“In a nutshell, the stamp duty discourages the elderly from downsizing and young expanding families from moving to more adequate larger housing.”
The Chancellor Philip Hammond is understood to be facing increasing pressure from within the Cabinet to reform stamp duty. One Cabinet minister who wished to remain anonymous told the Daily Telegraph the issue is having ‘a big implication in terms of economic growth’.
Mark Littlewood, director general of the Institute for Economic Affairs, told the newspaper that the Chancellor should be seeking to scrap stamp duty altogether. “It is not a tax on wealthy property owners. It is essentially a tax on moving home,” he said.
“Britain’s extortionate housing market is broken enough already without further penalising homeowners by charging them thousands of pounds unless they stay put in their current property. The government is actively encouraging people, especially the elderly, to remain in large properties when they would prefer to downsize and release a family-sized home onto the market.”
“Given the difficulty young families already face in getting on the housing ladder, it is an absurdity that the government is making it even harder through this outdated and nonsensical tax policy. If the Chancellor fails to take action in the budget this autumn, he will be guilty of exacerbating the crisis in our housing market.”
A spokesperson for the Treasury said: “Almost 90% of people want to own a home, but only 63% do. We reformed property taxes including stamp duty to help more people get on to the property ladder.” “In addition, we are helping people – including young families – to buy their first homes through policies such as Help to Buy and the Lifetime ISA, and the recent £2.3bn Housing Infrastructure Fund which will free up over 100,000 properties in high demand areas.”
Source: London Loves Business 9 August 2017