Calls For Stamp Duty Overhaul To Boost Property Market
The Royal Institution of Chartered Surveyors wants stamp duty to be overhauled so that the property market can get moving again. The Treasury is making eight times as much from stamp duty now as it did when Labour came to power in 1997. RICS wants changes so that the tax remains fair.
The Royal Institution of Chartered Surveyors has called for a radical overhaul of the stamp duty tax system on property. If their proposals were to be accepted, then the biggest winners would be first-time buyers and the worst off pensioners who wished to release money by selling up and moving to a smaller home. Anyone paying less than £1 million for a home would have to pay less tax, but neither of the above two groups would pay any stamp duty at all.
Before Labour came to office in 1997 stamp duty was charged at 1% on all properties sold for £60,000 or more. The rising price of property in the intervening years and fresh, higher bands of stamp duty mean that the Treasury income has gone up from £830m to £6.5bn each year.
Stamp duty has become an even bigger problem since property prices started coming down, as the extra burden of stamp duty on top of all the other expenses of moving house is preventing people from moving house, thereby adding more weakness to the market.
RICS is proposing a three-band scale and there would be no tax to pay on houses selling for £150,000 or less. Unlike the current operation of the tax, where moving from one band to the next means that the tax is paid on the full amount, the new system would mean that 2.5% tax would be payable on the £100,000 above £150,000. Stamp duty of 5% would then be payable on everything above £250,000.
RICS also says that the rate at which the tax is charged should be raised every year to keep it fair.
As a final alternative, if the Government doesn’t accept the proposals, RICS says that there should be a stamp duty ‘holiday’ to get the property market moving again. Both the Tories and the Council of Mortgage Lenders have called for stamp duty to be overhauled in recent years.
