Industry's pre-Budget call for stamp duty reform

With exactly three weeks to go before Chancellor George Osborne's 2014 Budget statement the property sector is ramping up calls for stamp duty reform.

The RICS says the tax is unfair because it stops people easily moving around the country and makes the market inefficient according to director Peter Bolton-King. It instead wants the tax to be levied in a more graduated way than the current steep thresholds, particularly those at £125,000, £250,000 and £500,000.

HowToHomeBuy.co.uk says this year some 31,000 first-time buyers around the country will purchase homes made more expensive because they involve paying at least £125,000 stamp duty. Some FTBs in Greater London, where the average first time home now costs £276,000, will pay three per cent duty.

Meanwhile the Chartered Institute of Housing says stamp duty reform could be the key to persuading older owner occupiers to sell, freeing homes for younger buyers.

The CIH wants the removal of stamp duty when older owners in receipt of Pension Credit down-size to smaller properties. This would create an affordable option for pensioners, free up larger homes for purchase, promoting more efficient use of the housing stock.

Calling for stamp duty reform has become something of a pre-Budget ritual - the RICS made a very similar call for reform as long ago as early 2008, for example - but there continues to be one obstacle to change. That is, the Treasury made £4.9bn from stamp duty in the 2012/13 financial year, so is unlikely to heed calls which cut this tax-take.

Defenders of current levels also say that some 70 per cent of all residential transactions are at the relatively low one per cent level, levied on homes priced below £250,000.