Published: 01/07/2019 By Allan Fuller
A comment by a candidate for leadership of the Tory party has suggested a radical change to the tax on buying property. Tax is always an emotive subject. We would all rather not pay any, or at least less than we do. Taxation is however vital to run essential local and national services. The difficulty is for governments to calculate how much is needed to pay for all those essentials, and the fairest way of apportioning the tax that we all pay.
Stamp Duty is just one tax and it has a considerable impact on the government’s revenue, but also on the country’s entire economy. It is also a classic case of set a tax rate too high a tax and revenue will drop. Stamp duty Tax on property is due when a property is sold and is paid by the purchaser. Due to the price bands that it are currently set at the greater burden is on property transactions in London and the South East where property values are higher than the rest of the country. This has hit older people hard especially those in a large house that they would want to downsize from but the value has been hit because a buyer has to pay 10% or more of the price in tax.
Quick easy sound bites of radical changes might have some political appeal, but this needs very careful thought and research including consultation with professional bodies such as The Royal Institution of Chartered Surveyors and the National Association of Estate Agents. We must accept that some level of tax is necessary, and it is not unfair for overseas buyers to pay an additional rate. However first time buyers must be encouraged and not penalised, the level that stamp duty starts from for them needs to be carefully assessed.
The way Stamp Duty Tax increases at various price levels has often created false price ceilings, this might appear to be good for buyers, but the system must be fair to all. In the passed there has been a set tax level across all price levels, the advantage of this is that there is more fluidity and therefore more people able to move.
At a time when the country and the government is in chaos due to the B word it is easy to ignore other areas that need attention. If the property market is active the country’s entire economy benefits, moving house creates work and employment for removal companies , builders, decorators, kitchen and bathroom suppliers, furnishing and carpet companies, interiors and garden suppliers, as well as a host of other industries.
Since the leave vote 3 years ago the housing market has, like so much else, been forced to take a back seat. Whatever political outcomes that lay ahead of us among all of the other factors that are urgent housing reform is vital. Merely overtaxing the purchase of a home does not contribute to any overall benefit.