Simon Gerrard, a past president of the National Association of Estate Agents, has called on the government to switch the burden of stamp duty payments from buyers to sellers.
This would make it easier for first time buyers - who would have only a deposit to save for, instead of duty as well - and for second-steppers and others moving up the property ladder says Gerrard, who runs his own agency.
Gerrard also wants a temporary Capital Gains Tax moratorium to encourage landowners to sell plots on which new homes could be built.
He has made his proposals in a letter to housing minister Alok Sharma, who last week - in his first major speech to the industry, at the Resi 2017 conference, almost 100 days after taking office - insisted that he wanted to go even further than this year's Housing White Paper in addressing the shortage of homes in many parts of the UK.
Dear Mr Sharma
To keep our economy strong, drastic policy changes are needed from the Government to support our struggling housing market
The Government’s housing white paper released earlier this year was titled ‘Fixing our broken housing market’ – but many in the industry felt that the measures announced were ultimately toothless. Whilst it made the right noises, a lack of active and transformative policy means we cannot fight the growing challenges facing our housing market. As the Prime Minister recognised, housing in Britain is wildly unaffordable and a barrier to progress for people in all walks of life.
The average house costs nearly eight times as much as average earnings. It is harder to get a mortgage than ever before and the average age of a first time buyer is getting higher each year. Fewer people own their own home as a result – the number of people living in rented homes has doubled since 2000. Such figures are only likely to rise. I meet so many people at a loss because either they cannot afford to move up the ladder or they cannot afford the space they need to live – it is without a doubt the crisis of our time.
The public and the industry are facing a failing and broken market. The public need to be empowered to not just get on the housing ladder but also move up it. The housing market is a cornerstone of the British economy, and with the uncertainty of Brexit it is vital that it remains healthy as a means of providing economic stability. It is therefore more important than ever that Government policy facilitates this.
To achieve this stability we need to see an increase in the number of properties available and a rise in the number of property transactions taking place. I believe there are two policy changes that, combined, will enable this and should be considered by the Government.
We are not producing any more land. At present landowners have no incentive to sell, and much incentive to sit on their land as it accrues value. This means that, despite a housing shortage, there are still swathes of land fit for development across the UK that are not being unlocked. The introduction of a temporary capital gains tax moratorium would provide the push needed for landowners to sell. A huge amount of land could be brought to market, allowing desperately needed homes to be built. It would also bring a brief pause to the ever-increasing price of land, further enabling the construction of more affordable housing for the British people.
For those looking to get onto or move up the ladder, there is currently a substantive hurdle in their way – stamp duty. In spite of voter friendly calls from the likes of MP Jacob Rees Mogg, I am not suggesting that stamp duty be scrapped altogether. I am not even campaigning against the extra 3% in stamp duty for those buying a second home or buy-to-let property. At present, you pay stamp duty on the home you want to have, not the one you are selling. By reversing stamp duty, and making the tax payable for those selling instead of buying, the Government would be actively encouraging people’s aspirations, not taxing them.
First time buyers would benefit from not paying any stamp duty, yet treasury coffers would be buoyed by revenue from an inevitable increase in transactional volume. I regularly meet families who are stuck in a house unsuited to their needs because the stamp duty involved when moving to a family home is so high, and as a result the market is stagnant.
I appreciate there are other political and financial consequences to consider, not least the issue for downsizers, but having drilled into these I believe they can be addressed and are minimal in comparison to the cost of inaction. I would like to meet with you to discuss how we can make this much needed policy shift a reality. Something has to change. There are millions of families unhappy and struggling day-to-day as a result of current, ineffective policies. The industry and Government must work together to initiate reform in a radical way, or the rhetoric means nothing.
As past-president of the National Association of Estate Agents (NAEA Propertymark) I understand the challenges presented by the property industry, and can bring contacts from across the property life cycle to inform and expand on my proposals.
This two-pronged approach is a simple solution that will benefit the Government in the long term. I hope to have the opportunity to work with you to make it a reality.
Simon Gerrard FNAEA PPNAEA MARLA
Managing Director, Martyn Gerrard