Many have wondered why the Government has ignored calls for Stamp Duty Land Tax reform, but new economic forecasts out yesterday may provide some answers.
Economists have increased their forecasts for the Government’s tax take from Stamp Duty over the next year.
The Office for Budget Responsibility (OBR), which is independently run but used by the Treasury for its official economic data, has revised its Stamp Duty predictions, made last November, for 2016-2017 by £0.3bn to £11.6bn.
The economists now predict Stamp Duty receipts on property will reach £17bn by the 2021-2022 tax year, up from £16.8bn predicted previously.
For the 2016-17 tax year, the OBR expects £6.9bn of receipts to come from residential property and £1.4bn from the additional property surcharge, and predicts this will increase to £11.1bn and £2bn respectively by the year 2021-22.
| Stamp Duty Land Tax: Receipts by sector | |||||||
| £ billion | |||||||
| Outturn | Forecast | ||||||
| 2015-16 | 2016-17 | 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 | |
| SDLT from residential property | 7.3 | 8.3 | 9.8 | 10.5 | 11.3 | 12.2 | 13.1 |
| of which: | |||||||
| main market rates | 6.9 | 8.1 | 8.7 | 9.4 | 10.2 | 11.1 | |
| additional properties 3 per cent surcharge1 | 1.4 | 1.7 | 1.8 | 1.8 | 1.9 | 2.0 | |
| SDLT from non-residential property | 3.4 | 3.1 | 3.1 | 3.3 | 3.4 | 3.5 | 3.7 |
| Annual tax on enveloped dwellings (ATED) | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 |
| Total SDLT | 10.9 | 11.6 | 13.1 | 14.0 | 14.8 | 15.9 | 17.0 |
| 1 Additional properties revenue is net of refunds which can be claimed up to 36 months after initial payment. | |||||||
A report from the OBR said: “Residential transactions and prices have been a little stronger than expected in recent months, but transactions are expected to fall year-on-year in 2016-17 as a whole, partly because of the effect of forestalling in advance of the additional properties surcharge.
“Transactions at the top of the market have fallen the most (but have also recovered somewhat since our November forecast). These make up an increasing share of receipts across the forecast period due to fiscal drag from fixed thresholds and continued growth in prices.
“Receipts from the 3% surcharge on additional properties (i.e. buy-to-let investments and second homes) that came into effect last April have been revised up in the short term as outturn receipts continue to be higher than expected.
“They have accounted for around a quarter of receipts from residential property in recent months. This rise does not feed through to later years as some of the recent strength appears to reflect the seasonal pattern of the market, which had not been fully factored into the forecast.
“There is continued uncertainty over the proportion of receipts that will ultimately be refunded – individuals have 36 months to make a claim, so we will not have full outturns for some time.
“We have retained our November assumption that 15% will be refunded in steady-state, but will keep this under review as more data become available.”
All current Stamp Duty levels are strangling the market?
No wonder why the Government appear to favour the rise of the call centre agents?
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Stamp duty levies do two key things for government.
1) and most importantly – more money;
2) encourages new home-buyers onto the housing ladder.
So sane government would reverse the decision to make more money and support their ideas to get people into the housing market, so why do we think we were entitled to a reversal of the original decision? That’s not a rhetorical or sarcastic question, by the way.
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Thank you for your question Mr Harvey.
Do higher stamp duty thresholds encourage more home buyers or sellers onto the housing ladder?
Since raising stamp duty levels from a basic 1% years ago are not people now moving a lot less often?
The economy has no doubt something to do with this but so has stamp duty costs as many have or are now using that perceived saving to extend their existing property rather than pay this excessive Stamp Duty moving tax?
The PRS needs many more properties available as the Government are not facilitating enough new or rental properties to be built.
Has the 3% surcharge on buy to let blown this market apart?
Why has the average age of a FTB risen from 26 to 36 ish in the past 25 years or so, could it be a combination of stamp duty, higher house price inflation, larger deposits required and lower income multiples?
Why does a FTB have to pay any tax on the average £175,000 market ‘up North’ ?
The average price of a property is now £440,000 ‘down South’. – These figures are calculated from recent combined RM price index stats for North and South.
Why Is buying an average home based on these averages now considered a £1000 luxury in the north and £12,000 stamp duty taxable luxury in the south?
Are the Government trying to offset some of the huge cost of buying, in particular stamp duty costs, by encouraging those investor subsided call centre agents?
If so, do the Government know that it may have actually cost the largest call centre agent more based on this northern average, to list a property than many full service agents charge based on this average ‘up north’ ?
Example £175,000 x 1.5% is £2,625 similar to their launch fee in Australia which appears to match their actual cost per listing during 2104/2015 in the UK?
So is it OK to spend around 1.5% based on this northern average if their investors subsidise the rest of the listing fee?
If so, is that not in itself, unfair competition?
Combine these two factors and threw in the dominance of the main two portals and could traditional estate agency on a no sale, no charge basis be heading for the perfect storm of consequence?
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