Experts divided on SDLT’s impact and proposed reforms in property market
The discourse around Stamp Duty Land Tax (SDLT) has recently heightened, sparking disagreement among policymakers and industry experts. The ongoing debate revolves around the potential complete abolition or restructuring of SDLT to address various challenges and controversies.
Research from August indicated that despite changes to stamp duty thresholds in September aimed at saving homebuyers money, the nation paid an estimated £884.3 million in the following six months, reaching £2.9 billion over the last year. These figures raise questions about the effectiveness of the changes and their impact on the housing market.
In March’s Budget, Chancellor Jeremy Hunt missed an opportunity to assist tens of thousands of would-be home buyers, according to the Homeownership Funding Association (HFA), further fueling discussions about the role of SDLT in supporting homeownership.
The National Association of Property Buyers (NAPB) has recently made demands related to SDLT and housing policy, calling for a reduction in stamp duty, enhanced tax relief for green landlords, and a campaign to boost house construction. These recommendations are part of a five-point plan, emphasizing the need for prompt action by the incoming government within the first 100 days.
The NAPB’s intervention coincides with concerns about falling house prices across the UK, with warnings that prices could decline monthly in 2024 without a clear roadmap to address housing market challenges.
These recommendations align with political developments, as the Labour Party pledges to turbo-charge housebuilding if they win the next election, highlighting the continued significance of housing policy, including SDLT, in the political and economic landscape.
A key proposal by the NAPB is to reduce Stamp Duty for downsizers by suspending full-rate Stamp Duty for last-time movers, aiming to increase the availability of larger, family-sized homes in the market. This proposal, limited to a 12-month period, echoes calls for a one-move free scheme for over-65s, similar to the scheme for first-time buyers for homes valued at up to £425,000 in England and Wales.
Anita from GD Legal underscored the current status of SDLT and its impact on the property market. She highlighted that SDLT remains a constant challenge for home-movers, especially those acquiring properties above the 0% threshold. The 5% rate applicable to properties between £250,001 and £925,000 is deemed disproportionate for individuals with average incomes, potentially causing stagnation in the housing market for non-first-time buyers. Bough suggests solutions, such as eliminating SDLT entirely and redistributing the burden, or less controversially, raising the 0% threshold significantly above average prices and tapering it to ensure a fairer field for average home-buyers.
The remarkable impact of the SDLT holiday in 2021 on the market emphasised that SDLT was a significant barrier to people moving. Any changes aimed at reducing the buyer’s burden, especially with the current high mortgage rates for the current generation of home movers, would have implications for the industry. Increased demand would lead to a greater need for supply, benefiting sellers who may find more flexibility in negotiations with potential buyers if thresholds and relief deadlines are less restrictive.
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