I’m intrigued by the government’s reported review into stamp duty land tax, which has served to put the brakes on transactions up and down the UK.
When you’re already coming up with a hefty deposit and paying conveyancers, amongst other things, the last thing you want is to spend extra money on a property tax. Having to come up with this lump sum is commonly seen as an incentive for older people to stay put instead of downsizing to free up stock. As such, the Chancellor is reportedly considering switching the tax so it’s charged to the seller instead of the buyer, as well as only levying it on properties worth over £500,000 – so it targets more wealthy people.
The challenge for Rachel Reeves and co is there’s no way of pleasing everybody, despite how flawed stamp duty is. If sellers started paying stamp duty what happens to homeowners who already paid a buyer tax on that property, but don’t plan on buying a new one? Are they expected to pay twice?
There’s also talk of council tax being replaced, and I do think in a lot of ways an annual property tax based on the cost of the house makes more sense than charging on transactions, if you want homes to change hands more often. However, if that came to pass it wouldn’t be without controversy, as asset-rich cash-poor people would surely struggle with an increased tax burden. Remember when ex-Labour leader Jeremy Corbyn proposed a mansion tax when running to be Prime Minister? All those same arguments would resurface around older people being pushed out of where they’re comfortable living, and it would be a PR headache for the government.
All this is to say, in making changes to stamp duty Labour head honchos have to make peace with the fact that no alteration can be made without angering someone. However, in my view, the alternative of doing nothing to stamp duty is the worst option.
