Ask any Conveyancing Solicitor or property specialist what they think the greatest obstacle to buyers is aside from getting a mortgage, and they'll likely all say the same thing - If the government is in the least concerned to get the house market moving, then apart from taking action to improve the availability of mortgages, they must take another look at stamp duty rates.
The top rate on houses is now 5% where the price is over £1million, and is 4% on purchases between £500, 000 and £1m. Although perhaps not many people pay more than £1m for their house, there are many areas where properties regularly fall within the 4% band, this equates to £24, 000 for a £600, 000 house.
When I first started working in property Conveyancing, the maximum rate of duty was 1%, which applied to purchases over £6, 000 (Yes, only £6, 000!). I can remember that even in the best part of the Essex town where I worked, few properties reached over £6, 000, and certainly the average price for ordinary houses was below the level at which any duty was payable.
Stamp duty is paid by buyers, so when you are having to pay all the other costs involved in buying a house and moving home, it is a significant extra expense. In fact, it usually amounts to the highest expense on a purchase transaction. If the government took the step of reducing the rates to more reasonable levels, surely this would help to encourage buyers back into the market? Although the government’s 'take' on each transaction might be less, if there were more sales going through there would be a higher number of taxable transactions, so the overall tax income to the government would not necessarily fall.
Stamp duty (or more properly now, Stamp Duty Land Tax or SDLT) is generally payable on the purchase or transfer of property or land in the UK where the amount paid is above a certain threshold. Although governments have increased the amounts of these thresholds over the years to keep pace with rising property prices, successive governments have over the last few years introduced more tax bands with higher rates applicable for each successive band.
Nowadays, the majority of house buyers have to pay SDLT, certainly in London and the South East. The government is obviously happy to rake in this tax, and although they provided some relief for first-time buyers, who can claim exemption where the price does not exceed £250, 000, this does not help many people. Although various wonderful schemes have been thought up to try and avoid SDLT, these are generally regarded with suspicion and the government will usually legislate to close any loopholes. Conveyancing Solicitors are generally wary of these schemes, as they are aware that HM Revenue and Customs have draconian powers, and do not want to find themselves being prosecuted for trying to defraud the revenue.
Many home owners find that they cannot sell their property because there are so few buyers on the market. So surely it would help to reduce SDLT rates to more reasonable levels, in line with those which applied in the past?