The government is being urged to abolish stamp duty and replace it with a new levy, according to the Centre for Policy Studies.
The think tank argues that scrapping the stamp duty holiday would stimulate greater activity in the housing market.
Alternatively, if stamp duty is not to be abolished, the think says that the government should focus on permanently increasing the stamp duty threshold to £500,000 for property sales in England and Northern Ireland
A report from the Centre for Policy Studies warns that the lessons of major crises, such as world wars, is that countries should slash taxes to encourage business investment.
Report author Jethro Elsden said: “A key lesson from post-war recovery is that interventionist, high-spending policies lead to lower and slower economic growth.
“Rather than maintaining big government after the pandemic, what we need is a smaller state which intervenes less – and to give the private sector the resources, support and certainty it needs to power the country back to growth.”
A spokesperson for the Treasury has said it will not speculate on tax ahead of fiscal events.
A recent survey found that more than half of conveyancers want stamp on property purchasers under £500,000 to be abolished.
A snap poll run by Index West Midlands revealed that 51.2% of conveyancers think scrapping stamp duty will be the best course of action.
But a fifth – 23.8% – still believe the value banding rates have a place and should return to normal once the holiday ends.
Around a quarter of conveyancers believe a gradual reintroduction of stamp duty is preferable to an overnight return to the stamp duty charges, with 14.5% wanting to see a phased reintroduction over two years, with 10.5% saying a shorter 12-month reintroduction timescale is ideal.
Around 1,000 professionals took part in the Index West Midlands poll.
“Without a fresh approach to Stamp Duty, the property purchases and sales will slowdown and eventually stall, which will be catastrophic for the property sector and the wider economy,” said Kate Bould, managing director of Index West Midlands.
Think tanks usually end up as self confirming group-think tanks where like minded people end up agreeing their cunning Baldrick plan is a great solution.
The migration from London due to Covid has caused market chaos anywhere it’s nicer to be in lockdown than London. Monied buyers are scrambling to buy whatever they can, wherever they can.
Covid has created an additional and artificial demand, low interest rates have increased affordability and therefore more demand, the stamp duty holiday more demand again. That’s 3 price inflationary pressures that have pushed prices artificially higher than the stamp duty that would have to have paid on their purchase.
Stimulating the housing market without thinking things through has exacerbated the housing crisis a lot
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Well said, Robert.
Would I be right in saying that what is more worrying is the amount of money that has been lent over the last twelve months is far greater than the total amount lent in the last two years previous to this?
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who knows? What I do know is that the false economy that’s been created really only has one solution and that really doesn’t bear thinking about.
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Agreed again, Robert.
I always find it fascinating how so many jump on the band wagon, taking the easy approach of thinking everything is rosey. The cycle of the market coming down again in price is already over due. I’m not taking a negative approach (which I’m sure others reading this at think I am!), it’s critical and realistic thinking that if there were more realising this in the business we could all prepare for it quicker and ride it in a less painful way, if that makes sense!?
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prepare for a storm and you’ll be good, if the storm doesn’t come you’ll do better
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Absolutely agree Robert. The point I would make is that House Price Inflation is not included in the CPI although the inflationary effects are felt within the wider economy.
As history has shown us, no matter how much the major Portals and other self interested parties “Talk Up” the market and propagandise issues such as the Stamp Duty debate, the market always correct itself.
The UK Housing cycle has been a series of Boom and Bust, usually built on cash injections into the economy that has been misdirected followed by low interest rates and the increasing availability of credit.
There is no reason to believe that the future won’t perform like the past
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house price inflation isn’t included but it is the cash it creates, that then gets released and spent, that does.
new kitchen, car, bathroom, tat and chintz. It is the artificial wealth, the impression of wealth and all the essential spending keeping up with the Joneses that is likely to come back hard on those that are playing that game
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I agree
Thats what I said 🙂
“although the inflationary effects are felt within the wider economy”
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just raise it to £350K that’s enough surely ?
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