Call for stamp duty on property purchases in UK to be abolished
A new report calls on the government to undertake real reform to tackle the housing shortage in the UK and in particular to abolish the stamp duty payable on home purchases.
According to the TaxPayers' Alliance successive governments have avoided meaningful reform, instead focusing on tinkering around the edges which has only served to worsen the situation and drive up prices.
It says that recent tax changes will drive up rents and the recently implemented 3% stamp duty additional homes surcharge and new restrictions on finance cost relief will also advantage richer prospective buyers at the expense of poorer tenants.
The TPA says stamp duty is an unfair tax which stops people from buying their own home, settling down with a family, moving for work or downsizing and makes the dream of home ownership ever more distant for millions of families.
The report explains that the 3% stamp duty additional homes surcharge will help prospective buyers but it will hurt tenants in rented accommodation and the restriction of finance cost relief for individual landlords will also advantage prospective buyers at the expense of tenants.
It believes that both policies will distort housing markets, with implications for incomes, employment and overall welfare and the tax hikes make Britain’s complex tax system even more complicated and distort ownership structures.
Other local policy choices such as increasing the cost of houses in multiple occupation (HMO) licences and introducing landlord licencing schemes will hit tenants and as existing owner occupiers take advantage of lower house prices this will result in a tightening of supply conditions in the lettings market, raising rents.
The report calls for the stamp duty surcharge to be cancelled, for all stamp duty rates to be halved immediately in a run up to the tax being abolished and reform to planning restrictions to declassify some green belt land and allow taller, denser construction in urban areas.
It explains that pressure needs to be taken out of the housing market by making land available for development less rare and less expensive to build on and says that declassifying just 5% of the green belt around London would allow the city to expand by almost a sixth.
‘For decades politicians have failed to tackle the root causes of the housing crisis: a chronic lack of supply. What's more, Stamp Duty is still punitively high and gimmicky tweaks to the tax system will ultimately end up penalising tenants and increasing rents,’ said Jonathan Isaby, chief executive of the TaxPayers' Alliance.
‘The new Chancellor should now seize the opportunity to drastically simplify and reduce property taxes as well as liberalise planning restrictions, which prevent huge swathes of land from being built on for no good reason at all,’ he added.
David Cox, managing director of the Association of Residential Lettings Agents (ARLA) said he would welcome a renewed debate on property tax. ‘ARLA has been consistent in our view that increasing tax for landlords will increase rents and reduce property standards for tenants,’ he explained.
‘In a market place that is struggling to meet demand, the Government must do more to increase the supply of rental property and not continue to come up with measures that act as a disincentive for investment in the private rented sector,’ he added.