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Stamp Duty Must Be Reformed

Business group the CBI has recently called on politicians of all parties to make housing a priority and to reform Stamp Duty.

The report finds that shortages have created above-inflation house price rises which is taking a £4bn bite out of consumers’ pockets every year – money they could otherwise save or spend in the wider economy. The CBI said many young people are also being stopped from getting on to the property ladder or renting a good home.

Katja Hall, CBI deputy director general, said: “With conference season around the corner, addressing the chronic housing shortage should be near the top of every party’s to-do list.

“A perfect storm is brewing in the housing market. With demographic changes and demand currently dramatically outstripping supply, now is the time for action.

“All Political parties have made the right noises on the need for more homes, but without serious action the ambition to own a home will become more and more out of reach to ordinary people.

“We need a stronger response from politicians who must be ready to take bold decisions from building on low-quality green belt land to overhauling Stamp Duty.”

To satisfy current levels of demand, the CBI says 240,000 new homes need to be built a year. However, over 200,000 homes have been delivered in only four out of the last 14 years, while in 2010, fewer houses were built than in any year since the Second World War.

It said this gap between supply and demand is pushing up prices, with a 56% increase in house prices nationally since 2004, and a 90% increase in London.

Among the measures the CBI is calling for are:

* The development of ten new towns and garden cities by 2025.

* Doubling the number of new homes currently built to 240,000 a year.

* Reforming Stamp Duty to end its distorting impact on the housing market.

* Giving local authorities more power to release low-quality green belt land.

The government admitted that despite looking at a need to reform stamp duty, ‘it was frankly money we need’.  Earlier a Tory MP called the tax ‘an untouchable cash cow’. But unless the government address stamp duty it is going to be an ever-increasing obstacle to property ownership.

Current stamp duty levels:

Purchase price/lease premium or transfer value

SDLT rate

Up to £125,000 Zero
Over £125,000 to £250,000 1%
Over £250,000 to £500,000 3%
Over £500,000 to £1 million 4%
Over £1 million to £2 million 5%
Over £2 million 7%

 

Article courtesy of Property Industry Eye.

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