Nationwide Building Society has made a number of pleas to the Chancellor to review certain financial issues ahead of this year's Budget.
Among them is the reform of the Stamp Duty system.
It wants to see changes to the current "slab" structure of Stamp Duty Land Tax and has asked George Osborne to consider a "fairer, more proportionate system, which would overcome the current distortions created in the housing market".
Nationwide said that this would offer practical help not just to first-time buyers working on achieving an affordable home of their own, but also to families seeking larger accommodation to fit their changing circumstances, those needing to move for work and those wishing to downsize.
Reform of the Stamp Duty system has widespread support. Royal Institute of Chartered Surveyors residential director Peter Bolton-King recently called it an "unfair tax that distorts the property markets.
"It stops people easily moving around the country and makes the market inefficient," he said.
Meanwhile, at the end of a five-year study by the Institute of Fiscal Studies, Stamp Duty was described as "highly inefficient, discouraging mobility and meaning that properties are not held by the people who value them the most."
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Comments
Give it a rest please. Everybody connected with the industry "calls for SDLT to be revised/abolished" since I don't know how long.
The Treasury isn't interested in listening.
"Stamp duty is a big issue for us as estate agents when the property is valued over 250,000 to 280,000 because people do not want to pay 3% stamp duty, so it becomes harder to sell properties in this price bracket."
Oh WOW! - I'm sure that, reading that, the hearts of buyers and sellers up and down the land are breaking for us poor Estate Agents.
Try a new trick - it's not a particularly novel one - but I find it works a treat.
It's called 'negotiating'.
"We have written 2 blogs on stamp duty..."
Well... one, actually - the other just takes you to the other page. Pity you don't actually know enough about the subject to actually do so:
"Stamp duty what you need to know
The SDLT rate depends on:
whether the property is residential"
WRONG. SDLT is levied on "non-residential and mixed-use properties".
"...whether the property is in a disadvantaged area"
WRONG. DAR is no longer. It was only available on transactions where the effective date of the transaction was BEFORE 6/4/13. Your blogpost was published FIVE MONTHS LATER.
I dread to think what other outdated or otherwise useless information is contained within your blogs...
Stamp duty thresholds have not been adjusted in line with the retail house price index either up or down. Currently in the South East 39% of all residential transactions had Stamp Duty of 3% imposed. Stamp Duty hits London and the South East particularly hard.
We have written 2 blogs on stamp duty and they can be found at www.estateagentsinnewmarket.co.uk
Stamp duty is a big issue for us as estate agents when the property is valued over 250,000 to 280,000 because people do not want to pay 3% stamp duty, so it becomes harder to sell properties in this price bracket.
The huge jumps in costs to buyers due to stamp duty thresholds is a major issue. A property that should be worth no more than 260,000 will never sell for more than 250,000 as this extra 10,000 will cost a buyer 7,800 in tax - that's 5,300 more than if they paid 250k.
That means an extra 10k on the purchase prices actually costs 15,300.
Either the sale price drops, or the vendor asks a much higher figure so that the threshold is of little relevance. These stamp duty bands create barriers and prevent a proper graduation of prices where values jump from 250k to say 280k and there is often a void in between. The answer would be to only pay the higher rate of tax on the amount above the threshold rather than the whole purchase price. In the example above, a purchase price of 260,000 would cost the buyer 3% of the overage - i.e 300. I believe the treasury would benefit as volumes would increase and the market would stabilize, free up more lending from the risk adverse, reduce down-valuations at the thresholds and level out these artificial price bands.
It would take pressure off those saving and reduce the amount they need to borrow. It would also reduce risk to lenders as buyers, especially First timers in the South East who wouldn't have to stretch quite as much. Even those that have enough savings, job security and income to facilitate a loan find they are exposed to near CIA like interrogation simply to get a Mortgage in Principle.
It's time to revisit this issue especially at a time when many are predicting a bubble and reporting FTB's have been priced out of the market.
Anyway - just a thought or two.