Government urged to scrap stamp duty

More than half of conveyancers want stamp on property purchasers under £500,000 to be abolished if the government continues with its plan to end the SDLT holiday on 31st March, a new survey shows.

A snap poll run by Index West Midlands found 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 from the 1st of April.

Around a quarter of conveyancers believe a gradual reintroduction of Stamp Duty is preferable to an overnight return to the stamp duty charges if the government sticks to its plan to end the holiday on the 31st March – 14.5% want to see a phased reintroduction over two years, with 10.5% saying a shorter 12-month reintroduction timescale is ideal.

The poll’s findings come in the wake of the government finally confirming earlier this week that MPs will debate the SDLT holiday extension next Monday, triggered by the ‘Extend the Stamp Duty for an additional six months after 31 March 2021’ online petition, which has not attracted more than 132,000 signatures.

Around 1,000 professionals took part in the Index West Midlands poll, which also reveals that 56% of conveyancers want to see an extension to the Stamp Duty, making this their top choice for changes to the conveyancing industry in 2021.

Almost a quarter – 24% – want more digitisation across the sector, while 20% want property exchanges and completions to be possible on Saturdays.

According to the poll, 64% of conveyancers believe the property buying process should be split into two to reduce the stress and anxiety on purchasers, so that the financial transaction stage on one day and the move into the property on the next day.

Kate Bould, managing director of Index West Midlands says: “It’s a relief that House of Commons is set to debate extending the SDLT holiday. The future of the property sector and economy depends on it, and our poll confirms that the majority of professionals working in it are against an overnight return to the Stamp Duty tax rates, believing that it should either be scrapped all together or be given a phased return.

“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.”

Homesearch EOS
x

Email the story to a friend



19 Comments

  1. flockfollower102

    The words ‘deck chairs’, ‘Titanic’ and ‘Rearrange’ spring to mind.

    SDLT should not have been stopped in the first place, the vast majority of transactions would have gone  ahead any way when this government suspended it. Now we have a cliff edge situation brought on by political fiddling in the market. SDLT will have to come back, bring it back and let’s all get on with our jobs, otherwise several cans will all get kicked down the road at the same time.

    Report
    1. DavidWales65

      It is an economic reality that most governments in the western world have some form of purchase tax on the acquisition of residential property to assist with their budget needs. The rates in the UK are broadly equivalent to similar taxes in our closest western European nations. With the Chancellor’s challenges in recovering the enormous national debt accrued during the pandemic, it would seem unlikely that we should expect extended tax breaks for the foreseeable future. If we are all really serious about wanting better equipped and staffed hospitals, schools, police, armed forces and associated public services then these all have to be paid for.

      There is a clever way that our Chancellor could both avoid a cliff edge event and then allow a gentler return of stamp duty and that would be to have an imminent cut off date for new transactions to qualify for the current relief. If the Chancellor was able to protect all transactions  currently underway by say close of business 29th January, which would then see live transactions benefit from the current relief rates, that would enable all transactions currently in pipeline to benefit and take enormous pressure off the conveyancing, lending, surveying and house building businesses all struggling to balance current demand in the midst of a lockdown. The provenance of transactions could be policed by a declaration as to the transaction start date in the stamp duty tax return form submitted by conveyancers on completion which HMRC always have the opportunity to call for evidence to substantiate. Wouldn’t this proposal solve the immediate looming problem?

      KR DJP NN4 7SH

      Report
      1. paulgbar666

        The CC and CV19 need not be paid for a upfront.   The costs should be spread over the next 100 years like war debt was.   The wartime generation weren’t expected to pay for the wartime borrowing very quickly. Indeed it was only paid off in 2006 I believe. So spread the CC and CV19 costs over the next 100 years and it wi be paid off eventually. Stifling economic activity by taxing too much in a fruitless effort to pay off massive borrowing makes no economic sense.   Certainly service the debt like a mortgage but a 100 year one!!

        Report
  2. Mythoughts

    How much of their motivation to have  SDLT scrapped is driven by the possibility of the immediate relief of pressure on their workload with  the removal of Stamp Duty  before 31st March 21?
    Can the Treasury afford to lose the annual tax receipts of £8.7BN pounds received in 2018?
    The matter being debated in Parliament is being heralded as an action that could immediately end SDLT. There is however  no obligation for the Government to change anything, no matter what the outcome of the debate.
    Mr Sunak will no doubt have most of his plans already in place for the budget on 03 March. If he now has to scrap SDLT or extend by 6 months (when the same clamour might arise again) trying in the long term to stem the permanent  loss of tax reveneue from SDLT, for a Government that is looking to increase its tax receipts after a record level of borrowing,  would lead to other taxes such  as Corporation Tax, Inheritance Tax or  Capital Gains to be raised even higher.
    It is rumoured that Corpotation Tax will be raised from 18% to 23%.
    Had the scrapping of SDLT been in his plans with just over 5 weeks to the budget, surely he would have made that clear by now?    

    Report
  3. paulgbar666

    SDLT on only properties above £500000 is an excellent idea.

    Doing this would generate much economic activity which the UK economy desperately needs.

     

    Taxes generated from all associated economic activity will more than make up for lost SDLT on properties below £500000.

    If SDLT is not scrapped as suggested then people will just stay where they are so not generating any economic activity at all.

    It is well known that buying and selling in properties generates enormous internal income generation which is taxed.

    Getting rid of this SDLT is a sprat to catch a mackerel!

    It would generate enormous taxable revenue for the Treasury.

    But if course Govt won’t consider this as a viable economic strategy even though it is.

    So nothing will change and the market will return to the Doldrums benefiting nobody.

     

    Report
    1. Mythoughts

      61% of SDLT revenue is collected from properties under £250,000.  SDLT of £11.67BN was collected in 2020. 
      The indirect tax generated by the buying and selling  of house sales may seem significant but when compared to other industries such as  hopsitality (which has been lockdown), that is not the case. 
      Using a sprat to catch a mackerell could be a novel econonic strategy but unfortunately, in this case, the mackerell might well be smaller than the sprat .        

      Report
      1. paulgbar666

        The problem is that many will choose to improve rather than move so Govt will miss on SDLT and Al the other associated benefits of a property being sold and bought.

         

        Of course there would be an uplift in tax receipts from improvements such as extensions etc but nowhere as much if a property had been sold.

        Unless incentivised in these straitened times most people will just stay where they are which benefits no one.

        Buying and selling a house should be as easy as signing up for tenancy.

         

        Penal taxation prevents this occurring.

        That benefits nobody.

         

         

        Report
        1. Shelf

          Problem is that you cant buy a property under £250.000 that would give space to growing families.

          We are down sizing from a 4 bed to a 2 bed in the hope that it enables young couples to grow into properties. If we get caught in the Stamp Duty debacle, we may decide to remain where we are, which will help nobody

          Report
          1. Mythoughts

            I am sorry that you are clearly affected by the Stamp Duty. There is however much variation of property in price.

            In London, the average first time buyer pays over £445k yet in Yorkshire and Humberside the FTB pays £154k with the Midlands FTB around £176K, Both areas for  FTB being exempt from Stamp Duty,

            Owner occupied property is London is £586K yet in Yorkshire £204k & the Midlands £246k.

            The South West for FTB £228k v £315K.

            As you can see there are lost of regions where £250k will buy a family home for under £250K

            Despite the rhetoric of the press, the impact of the Stamp Duty for many as previously said, is overshadowed by the price increases in their area. For too many in the press,  the world may revolve around London and The Home Counties but there is plenty of population spread around the remainder of this fair Isle!

             

             

             

             

             

             

            Report
      2. Industry_Pro

        In the case of a 50K extension with an additional 5K of F&F, carpets etc, the treasury would be in receipt of an additional £9,166 of VAT. Probably more beneficial than the SDLT receipts.

        Report
    2. AgencyInsider

      If SDLT is not scrapped as suggested then people will just stay where they are

      Really? How on earth did we ever manage to have an active property market when SDLT was in place?

      Report
      1. paulgbar666

        Because without such penal SDLT there would be a far more active market.   Of course there will always be some who choose to move.   But just consider a those who have extended. They are a total loss to property activity as they won’t need to move as they have improved to render moving unnecessary.

        Report
        1. Mythoughts

          In some ways you are correct. The Government admitted the reason for the SDLT payment holiday was to stimulate demand and also as both this and the previous SDLT holiday have shown, it works in the short term.

          All good news from the consumers viewpoint.

          Not having been tested over a longer period of time, it can not be assumed that the same levels of activity will continue. People only move a few time their adult life.

          There are however several reasons  why the SDLT holiday has been timed limited. The first is the cost. Initial treasury estimates for this holiday was around £3.3bn. It is likely to end up costing in excess of £5bn

          A fall in tax revenues has two effects, greater government borrowings to fund such things as Public Services or a reduction in the number or level of services available to the Public. (Heath, Education & Welfare, Defence to name a few)

          Secondly, unbridled house price growth leads to inflationary pressure that in turn means higher prices, This once again places pressure on the Government and funding of the services.

          It’s why I believe Mr Sunak will tread very carefully when considering SDLT and is more likely to devise  a new type of Property Tax that will affect the current  24m homeowners rather than the average 1.2m buyers each year. Its no prediction, just my thoughts!

          Report
  4. Essjaydee51

    My thoughts. That’s a little disingenuous, the correct summing up of your calculation is 61% of Stamp duty is generated from the second half of £250k from ALL sales of every price range from 250k to Infiniti, that is of course if your original calculation of 61% is correct in the first place

    Report
    1. Mythoughts

      The 61% of SDLT is collected from property priced up to £250,000. Not from the gap between £250,000 to £5000. The source: Office of National Statistics.

       

       

      Report
  5. St4r

    This only puts more pressure on first time buyers, hopefully the stamp duty tax carries on as expected from March that will help support first time purchasers get on the ladders and help raise their deposit funds since lending criteria has become more strict for those with little deposit and sdt cut is clearly and simply beneficial to second buyers- Not failing to remember house prices have bounced since investors have taken control over the spot past months.

    Report
    1. Mythoughts

      Since November 17 First time buyers have been exempt from SDLT on the first  £300,000.
      The stamp duty is  payable upon the remaining balance of  £200,000 of a £500000 house  purchase.
      The duty  is less  than the cost of the average price increase of 6.5%. of the purchase price. In some areas, house price growth has exceeded this figure,
      A price increased that in part has been caused by the SDLT payment holiday.
      In fact the nearer the price point of £300,000 the greater effects of increased prices for the FTB.
      Whilst the average house price is still under £300,000, the majority of FTB have not or will  not be affected by Stamp Duty.
      It is House price growth that affects everyone.        

      Report
  6. Rob Hailstone

    “Around 1,000 professionals took part in the Index West Midlands poll.” Impressive.
    The Bold Legal Group has 700 member firms and about 5000 individual bulletin recipients. If I sent a poll out now, most would ignore it, or worse, ask me why I was being such an idiot interrupting them when they are so busy.

    Report
  7. Industry_Pro

    Perhaps property taxation should be levied on ALL property sellers at an appropriate rate.

    In this way FTB’s are released from the additional pressure of finding the extra cash for SDLT particularly in London and the south east where a modest property costs 400K-600K. The increase in the number of FTB’s in the market will stimulate demand, prices and the equity held within property values. When it is time for a First Time Seller to enter the market they to will then contribute to the property taxation take.

    Generally speaking, property sellers will have built up a decent level of equity which can be used in part to pay the property transaction tax. In this way there will be a greater number of people contributing to the tax pool as opposed to the current system where a significant proportion of FTB’s do not.

    Report
X

You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.