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It was recently reported that the Prime Minister is considering reducing stamp duty in the next autumn budget. Specifically, it is rumored that the threshold before stamp duty will rise from £250,000 to £300,000.
I see this as more than a last-ditch attempt by the party in power to sway voters by showing a modicum of hope that people might be able to buy a home, and by trying to give the impression that It is difficult to regard it as such. This government is serious about fixing the broken housing market.
In reality, these are not reforms, but pure tinkering and do not touch the sides. If the government was serious about changing stamp duty to create a market that responds to people’s needs, it would take more drastic steps that actually help people. These include scrapping stamp duty so that sellers pay it, and abolishing stamp duty completely for older homeowners who are downsizing.
holes in the plan
At first glance, the government’s proposed stamp duty reforms may seem positive. But a closer look at the plan reveals that it’s nothing more than a wet squib.
It is questionable that this proposal will even offset pandemic inflation, given that home prices soared 20.4% during the pandemic period (January 2020 to December 2022), according to Halifax, which is the lowest in the past. Does not take into account 5 quarters of inflation.
These plans are woefully inadequate and will not have a lasting impact on the real estate market for the vast majority of homebuyers, especially those in large cities. Although inflation has been brought under control after a period of severe turmoil, it remains a burden on markets and transaction rates are depressed. As a result, we are faced with a weak, lifeless market and a surgeon-like government unwilling to do what it takes to revive it.
history repeats
The reforms currently proposed are consistent with the government’s history of half-hearted policy on stamp duty, and while the government recognizes the need for change, it is a political party willing to do something meaningful. is missing.
The previous stamp duty cut introduced in the infamous autumn 2022 “mini-budget” was a positive step forward, but it had a built-in 31-day expiry date.cent March 2025. Both national and local governments appear willing to experiment with stamp duty reform, but do not seem willing to offer long-term, practical solutions.
I have seen first-hand how rising house prices, and therefore stamp duty, are impacting families. Particularly those with young children, who may be able to take the first step onto the housing ladder, are no longer able to take the second step into a family-sized home. As a result, they end up living in unsuitably small apartments, reducing their quality of life.
break the bottleneck
I believe there is a solution. Stamp duty should be canceled completely and made payable by the seller rather than the buyer. Additionally, taxes on older homeowners who are downsizing should be completely abolished.
Once introduced, the first measures would help eliminate one of the major bottlenecks currently holding the market back. Re-steppers who are unable to move a young family from a small apartment to a family-sized home. This reform will have a very positive impact on the affordability of climbing the housing ladder for many families who are currently unable to do so.
However, this does not realistically work for older homeowners who live in inappropriately large homes. The second measure would abolish stamp duty on empty nesters, which would not only solve this problem but also actively encourage them to find homes better suited to their needs. . By supporting downsizers, we can provide family-sized housing for second-steppers who need it even more.
Finally, these policies also benefit first-time buyers. Since they have no real estate to sell, they will continue to be exempt from taxes no matter how much real estate prices rise. As families move up the housing ladder, they will also benefit from a freer market that increases the availability of first homes.
The end of the tax on ambition
As it stands, stamp duty is a tax on ambition. It puts obstacles in the way of hard-working families and young people trying to find their way up the housing ladder. Meanwhile, at the top of this ladder, there are no tax incentives at all for people to downsize.
In the midst of a technological recession, shouldn’t we be encouraging homebuying ambitions rather than flattening them? After all, in a free-flowing property market, transaction volumes increase. , the revenue the government receives through stamp duty will also increase.
As it stands, the proposed stamp duty cuts are like trying to wipe up an oil spill with a handkerchief. Removing taxes on this ambition would enable a housing market that responds to people’s needs, rather than crushing their dreams of owning a home.
We have reached a point where the UK housing market is no longer fit for purpose and there is no point in tinkering with the edges of a broken machine, as the Government is proposing.
That’s why I’m running a petition calling for sweeping reforms that introduce the two measures mentioned in this article. Change.org.
Simon Gerrard is Managing Director of Martin Gerrard Estate Agents
Prominent real estate company president launches petition calling for stamp tax reform