The government needs to be careful about stalling parts of the market with far-reaching tax changes, Rightmove has warned.
One speculated change is removing stamp duty and replacing it with a sellers’ tax affecting homes in England worth over £500,000 – as well as an annual tax for buyers of £500,000+ valued properties.
There are fears this would disincentivise the owners of high-value properties from downsizing.
Johan Svanstrom, chief executive of Rightmove, said: “We need to make it easier and more attractive for those at the top of the market to consider downsizing if they are in a position to do so.
“There is no real incentive for someone in a large home to downsize to a smaller one unless they truly need to and can still afford the stamp duty bill.
“The current rumours to stamp duty changes would only seem to exacerbate this, as it may deter some at the top of the market from moving if they would then face a new annual tax.”
Such a change would disproportionately affect London, where more than half of homes (59%) have an asking price over £500,000, and the average property price stands at £667,000.
Another speculated change is a potential new capital gains ‘mansion tax’ on homes worth over £1.5 million, which would capture one in 10 (11%) properties in London.
Svanstrom added: “As our real time data shows, a proposed mansion tax would only affect a small proportion of the market.
“However, the government needs to be cautious over the cumulative effect of taxation on higher priced areas of the country as it simply risks stalling this part of the market, since the importance of mobility for people and the overall economy is strong in those areas too.
“A slower market can affect all types of movers, from first-time buyers to key workers and families, even if a tax is aimed at higher value properties.”
