Stamp duty reform demanded
Thursday, 15 October 2009 08:52
The property industry is demanding Alistair Darling uses the pre-Budget report to reform stamp duty.
Bodies including the National Association of Estate Agents (NAEA) and the Association of Residential Lettings Agents (ARLA) - forming the 1808 Coalition - are calling for a massive shake up on what they call a "tax on aspiration".
The demands include a complete suspension of stamp duty during the housing downturn.
The coalition is also demanding a shake-up of the 'slab' system of stamp duty - where taxes cut in and rise in set thresholds.
Currently there is no stamp duty for properties up to £175,000, although this will drop to £150,000 at the end of the year.
On properties valued between £175,000 and £250,000 the rate is one per cent, then three per cent from £250,000 to £500,000 and four per cent for homes over £500,000.
It is claimed this system distorts the market and prices around these thresholds.
In its place the bodies want a 'slice' system or progressive system which is index-linked to inflation.
They also demand the opening threshold should be well above £175,000 as an aid to first-time buyers.
Peter Bolton-King, NAEA chief executive, said: "Stamp Duty is a barrier to entry for many first time buyers and is also prohibitive for those looking for a step up the property ladder.
"The time has come to re-assess Britain's most unpopular tax, which is a levy on those aspiring to own their own homes and is manifestly perceived by all those who pay it as being unfair and punitive."
Between 1997 and 2008 annual tax receipts from Stamp Duty grew from £675 million to £6.68 billion.
The spread of how different regions pay great levels of stamp duty has also been raised - with London paying 29.4 per cent of the stamp duty on 11.5 per cent of all transactions.
Meanwhile Scotland records a similar level of property transactions (10.7 per cent) but raised just 6.3 per cent of the tax.
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Mr Bolton King added: "Stamp Duty has failed to evolve and is an unwelcome burden for anyone seeking to buy a new home.
"As lenders demand even greater deposits, buyers are going to struggle to stump up the huge capital outlay that Stamp Duty demands. Now is the perfect time to seek change and produce a fairer tax that recognises the challenges that modern house buyers face."
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