Free up the property ladder
The report – entitled Reforming Stamp Duty: New ideas to promote home ownership – was put together by MP Chris Philp, a former PPS to the Treasury, and Guy Miscampbell, a senior research fellow at the think-tank. Its main proposal is that abolishing stamp duty on homes worth less than £500,000 would help more than 770,000 people move up the property ladder. That would mean a saving of around £2,080 on the average price of a family home and a saving of £12,850 when buying an average priced home in London of £457,000.
Introduce new levies
Abolishing stamp duty on property worth less than £500,000 would leave a £3.3 billion hole in Treasury finances. However, Onward’s report suggests that deficit can be made up by levying surcharges on property that is under-taxed or where the public supports greater taxation. For example, it proposes imposing a 1 percent annual tax on homes that have been left empty for more than six months a year, closing a loophole that allows foreign investors in particular to buy London property for tax efficiency without ever living in it. This levy would raise £645 million a year, says Onward. It also favours raising the current 3 percent stamp duty surcharge on second homes and investments properties to 3 percent to raise £790 million annually.
Prime Minister Boris Johnson had proposed raising the stamp duty land tax threshold from its current level of £125,000 to £500,000 during his campaign to become leader of the Conservative Party. He also suggested reducing the top rate of stamp duty from 12 percent to 7 percent, a rate payable only on homes sold for more than £1.5 million. His other, most radical proposal is that sellers become liable for stamp duty rather than buyers, but there have been no further announcements on his plans since taking office.
Kick-start home ownership dream
Chris Philp, co-author of the Onward report, said: “These stamp duty cuts are designed to kick-start the home ownership dream – just as Thatcher did in the 1980s; 86 percent of the public want to own their own home, yet only 63 percent do. “This will help first-time buyers, downsizers, upsizers and people needing to move for work. “These reforms will get the whole housing market moving and help make sure we are making the best use of housing stock by making it easier for older people in large houses to move, allowing growing families to move in.” Any moves on Stamp Duty Land Tax would only apply in England and Northern Ireland as Scotland and Wales have their own devolved land tax systems.