Rise in stamp duty is one of the factors responsible for the current property crisis
Stamp duty is playing spoilsport as evident in the current property crisis. It is contributing to the property crisis the UK is going through in the present times. Heavy stamp duty is causing problems for property owners and those looking for new properties. It is affecting the older homeowners as well as the younger generation looking to move up the property ladder.
For the older generation, it means staying put in the same house as shifting to some other place will mean lot in terms of stamp duty. On the other hand, the younger people can’t simply afford a new property. The younger families are unable to move to bigger houses because of the amount of tax involved.
A report by the London School of Economics says that home moving would be 27 per cent higher if the tax is abolished. The tax is proving to be a big problem for expensive properties. Stamp duty is £20,000 on a £600,000 home and a huge £143,000 on a £2million property. The levy has been dubbed a “tax on moving” and is responsible for record low levels of homes for sale in recent months, according to experts.
Professor Christian Hilber, who co-authored the report, said:
‘Stamp duty discourages young expanding families from moving to more adequate, larger housing and it discourages the elderly from downsizing.
‘Our analysis suggests that mobility would be 27 per cent higher if stamp duty was abolished or replaced with an annual tax on the value of property.’
‘Stamp duty hinders household mobility substantially – it creates a mismatch and distortions in the housing market.’
“If you are a young family and you have an additional child, you’ll need an additional room, but the stamp duty is discouraging this kind of move because of the additional cost and lack of available homes to move into.”
The current stamp duty system was introduced by former Chancellor George Osborne in 2014 and he is under pressure to reform the stamp duty system.
An HM Treasury spokesman said:
‘Almost 90 per cent of people want to own a home, but only 63 per cent do. We reformed property taxes including stamp duty to help more people get onto the property ladder.
‘In addition, we are helping people – including young families – to buy their first homes through policies such as Help to Buy and the Lifetime ISA, and the recent £2.3bn Housing Infrastructure Fund which will free up over 100,000 properties in high demand areas.’
In 2016, homebuyers in England and Wales paid £8.3 billion in stamp duty, which is £1.2 billion more than the previous year.
Andrew Mason, Lloyds Bank mortgage products director, said:
“Rising house prices have caused stamp duty payments to continue to increase despite the reforms that came into effect from December 2014.
“Escalating stamp duty payments have contributed to significant increases in moving costs in recent years.”