Radical reform of stamp duty can help revitalise the housing market and encourage developers to build more homes.
That’s the view of a new report from the think-tank, the Centre for Policy Studies (CPS).
The report has been written by CPS head of policy Alex Morton, a former adviser to David Cameron.
In it, he suggests raising the threshold for Stamp Duty Land Tax (SDLT) to £500,000 would have “dynamic effects” on revenue and new homes.
Stamp duty reform hot political topic
SDLT currently raises around £5.1 billion every year from property and land sales in England, the duty being paid on a sliding percentage scale.
The current threshold above which the duty is paid is £125,000 with first-time buyers exempt from paying the tax on properties worth up to £300,000.
However, reform of the land tax is one of the most discussed topics in property.
During the Conservative Party leadership contest earlier this year, Boris Johnson suggested switching responsibility for paying stamp duty from buyers to sellers.
However, that suggestion has not been turned into a concrete proposal now Mr Johnson is Prime Minister.
‘Brake on social mobility’
Morton’s report, entitled Stamping Down, says stamp duty is a brake on social mobility. According to his analysis, its suggested reform would take around 90 percent of housing transactions out of paying the tax.
Morton said: “While the Treasury are right to be fiscally focused, they need to take into account the fact that stamp duty on homes has an impact on transactions.
“We propose a far more appropriate rate for the most valuable homes, which would take nine out of 10 people out of the tax altogether.”
The average stamp duty bill in England is £2,300. Meanwhile, home buyers in the south-east pay the highest average bill of more than £6,000.
Call for bold action
Robert Colvile, director of the CPS, added: “It’s no coincidence that stamp duty is one of the taxes that people hate the most.
“It’s a huge barrier to people living in the kind of homes that best fit their families and their lives.
“And, as our report has shown, the current sky-high levels are doing more harm than good.
“We urge the Government to take bold action to stamp down on stamp duty and get the property market moving again.”
For more information on Stamp Duty Land Tax in England, read Homeward Legal’s comprehensive guide here. You can also find details on the Land Transaction Tax (LTT) that replaced stamp duty in Wales.