Lately of course, companies like the Royal Institution of Chartered Surveyors have been calling for a stamp duty holiday to kick-start the housing market, and you can see why they are shouting loud.
The tax is a political football that’s been changed so many times by politicians that it hardly seems a stretch that it could be temporarily halted.
In 2010 then-Chancellor Alistair Darling abolished the tax for two years for first-time buyers paying under £250,000.
In the 2015 Autumn Statement the government introduced a 3% stamp duty surcharge on buy-to-let and second homes, which came into force in April 2016.
And the 2017 Budget saw stamp duty abolished for first-time buyers in England and Wales purchasing properties worth up to £300,000. Meanwhile if they spend up to £500,000 they only pay the tax on the amount over £300,000.
The tax has been criticised as many times as it’s been changed.
In November 2017 the London School of Economics published a report on the tax, which was commissioned by Family Building Society.
This accused stamp duty of being the “greatest impediment to a more dynamic, liquid housing market”.
The report pointed out that potential downsizers resent paying the tax to move, so they are more likely to stay put.
Meanwhile it drew attention to the trend of families extending properties rather than paying the tax.
This can also result in there being fewer properties suitable for first-time buyers, so the UK ends up with fewer properties with one or two bedrooms.
The tax was criticised for a different reason last week, as Cornerstone Tax said many people were overpaying stamp duty due to its complicated nature.
Of course, the tax is a lucrative one for the government.
The government collected £11.9bn in stamp duty land tax receipts in the 2018/2019 tax year.
And given that the OBS has forecasted the UK deficit to rise to £300bn, partly as a result of government schemes responding to the lockdown, the UK Treasury needs all the money it can get.
So what can be done to stamp duty?
A stamp duty holiday would likely help get the housing market moving, but it would cost the government money. A similar option would be to temporarily reduce the cost of stamp duty, so people are incentivised to move but still pay some of the tax.
Looking more long term, if the authorities wants to keep raking in tax money but free up the housing market it might be worth getting rid of stamp duty and charging more tax to homeowners every year instead.
That way people won’t be punished for choosing to move and the burden would be more consistent for homeowners, whether you move often or like to stay put.
Whatever happens, it would be nice to reach a situation where people are more accepting of the tax in whatever form it takes, so there isn’t a need to change it every few years.
Nobody likes getting taxed, but I can’t think of any other policy relating to the housing market that has resulted in so much noise since the turn of the century.
If history is anything to go by, it would hardly be a surprise for stamp duty to change again this year – whether the government introduces a holiday or not.
Ryan Bembridge, Editor, PropertyWire
