RICS leads calls for stamp duty change in the UK

UK Chancellor George Osborne is being urged to look again at the nation's Stamp Duty thresholds with a view to announcing a change in his forthcoming Budget 2014.

The Royal Institute of Chartered Surveyors (RICS) is leading the calls, describing it as ‘an archaic tax structure which is distorting the housing market’.

RICS says that the existing ‘slab system taxes a percentage of a home's purchase price according to which value bracket it happens to fall into. For instance, a buyer purchasing a property for under £250,000 would pay 1% of the price in tax, while a home sold for just one pound more would generate a tax bill of 3%.

This means that many buyers are financially unable to venture above the threshold and vendors may have to price their home below what they may otherwise have sold it for.

RICS believes that the government should consider a fairer, marginal rate to replace the current structure which sees few homes come onto the market at between £250,00 and £275,000 whether or not they are worth that price.

RICS also says that the government should consider adapting the hugely successful Help to Buy to suit individual regions' needs. Some 60% of RICS members surveyed believe that adjusting the scheme on a regional basis would make the market more sustainable. Furthermore, half of those who are in favour believe that the funding should be limited purely to first time buyers. RICS would like to see the government reassess the scheme with a view to providing the relevant help according to an individual region's needs.

There has been much talk recently in the property industry about the creation of garden cities to help meet the huge housing shortfall in the country and RICS says in its pre-Budget statement that they could prove a good means of boosting the supply of homes on the market.
 
However, it adds that these cities need to be located in places where people are able and willing to live, close to sources of employment and the houses need to be affordable housing. To make the garden cities a reality the government needs to publish its outline prospectus to test the market by giving potential developers, communities and investors clarity and certainty.

‘This is a very important Budget for the Chancellor and one which will shape the economy in the run-up to the general election,' said Jeremy Blackburn, RICS head of UK policy.

'A major area of concern in the property sector, at present, is the current Stamp Duty system which is both out of date and distorts the market by taxing buyers disproportionately high amounts should they go just one pound over the pre-set thresholds. A more intelligent, modern way of taxing property sales is needed for a market which is changing at a rate of knots,’ Blackburn explained.

‘We would also like to see George Osborne provide more detail as to exactly what is meant by new garden cities and precisely how they would benefit communities and the economy,’ he added.