Chancellor George Osborne is being urged to use next month’s Autumn Statement to launch a comprehensive review of stamp duty which is hitting house buyers hard at all levels and creates contentious issues at certain threshold changes.
Halls Estate Agents, based in Worcester, says an urgent review of the property tax system is long overdue and branded stamp duty “archaic and unfair”.
Halls’ associate partner George Pickard said: “We are at long last on the cusp of a housing market recovery after a very difficult recession. However, it is being held back by the archaic and unfair stamp duty system which is hitting first time buyers, hard working families and house buyers at all levels.
“Stamp duty has been a bone of contention for many years. People see that they have to pay out a great deal of money and don’t get very much in return. They accept that it is something they will have to fork out but it is becoming a major obstacle for the housing market recovery.”
One way of making the current system fairer could be the introduction of a new threshold from £250,000 to £375,000 at 2%, he said.
“It plugs the gap between the 1% and 3% thresholds and will benefit ‘middle Britain’ with a 1% reduction in stamp duty – at £250,000 your tax is only £5,000 and not the current £7,500. Unfortunately, this price range is probably the Government’s biggest earner.”
He added: “We are asking the Chancellor to take a close look at how the stamp duty system could be improved so that everyone is treated more fairly. Could it be more incremental? Could there be a flat rate that everyone pays? It is in the interests of the Exchequer to encourage more movement in the housing market as it generates a tidy income.
“However, when faced with stamp duty bills running into many thousands of pounds many would-be buyers are thinking twice. I’m not saying I know what the answer is but research should be carried out to create a system that is fairer to all.”
According to the Organisation for Economic Co-operation and Development (OECD), Britons pay higher property taxes than any other country in the developed world, forking out around £60billion a year.
Charges like stamp duty, council tax, capital gains tax, inheritance tax and business rates are higher in the UK than any of the 33 other OECD members.
The taxes are worth 4.1 per cent of Britain’s economic output, compared to an average of 1.8 per cent across the OECD. In Germany, it is only 0.9 per cent.
Alex Morton, of the think-tank Policy Exchange, said there is a “strong case” to cut back stamp duty to “a low and reasonably small tax”, which has been repeatedly increased by both Labour and the Conservatives since 1997.
By 2018, stamp duty could be worth a record-breaking £9.4billion a year, according to the latest forecast from the independent Office for Budget Responsibility.
Stamp duty used to be charged at one per cent on all homes bought for more than £60,000. Today it is levied at five different rates of up to seven per cent. According to statistics from The Taxpayers’ Alliance, more than a quarter of home-buyers are now getting hit with a stamp duty bill for £7,500 or more, paying the 3 per cent rate.
The Taxpayers’ Alliance says Stamp Duty is a challenging obstacle in the way of first-time buyers who dream of owning their own home. It also creates problems for anyone with a growing family and anyone who needs to move to take a new job. And it discourages elderly people from downsizing to a smaller property more suitable for their needs.