If anyone thought a Boris Johnson government would be more decisive than Theresa May's when it came to housing policies, the last 72 hours may have been a disappointment.
On Friday evening - in an advance release of the Saturday front page of The Times - Chancellor Sajid Javid was quoted as considering wide-ranging reform of stamp duty, including the possibility of switching the burden from buyers to sellers.
He was cited as saying the switch was one of a number of measures actively under consideration ahead of this autumn’s Budget.
This prompted speculation that a Budget may come soon and led leading property experts to suggest that speculation over stamp duty could kill the housing market until the change actually took effect - as buyers and sellers would simply sit on their hands, expecting to pay less when the reform kicked in.
But then on Sunday morning - a full 36 hours after the ‘switch’ stamp duty story was first released by The Times - the Chancellor then denied any such suggestion.
Yesterday morning on Twitter he said: “More speculation about stamp duty this morning. To be clear, I never said to The Times I was planning to put it on sellers, and I wouldn’t support that. I know from the Ministry of Housing, Communities and Local Government that we need bold measures on housing - but this isn’t one of them.”
The possibility of switching payment from buyers to sellers was put forward during the Tory leadership contest when a trade body - the Association of Accounting Technicians - lobbied Boris Johnson to consider switching the burden to the seller.
Some weeks ago the AAT said Johnson suggested was considering such a move - a statement which then received no denial from the Johnson campaign camp.
During the leadership contest Boris Johnson himself spoke of the need to reduce the highest rate of stamp duty from 12 to seven per cent, especially to help the flailing London market.
Johnson wrote in the Daily Telegraph in June: "I think particularly in London there is clearly a problem with stamp duty and it needs to be addressed … I’m not going to put a figure on how much we’re going to cut but we will certainly be looking to do that because I think actually you can do that in such a way as to increase revenues if you get it right because the market is locked up at the moment.”
The renewed chatter and apparent government confusion over stamp duty comes as one high profile estate agency claims the burden of stamp duty now falls unfairly on London.
Benham and Reeves has analysed stamp duty paid between 2008 and 2018 and claims that there is “a revealing and rather stark contrast” between that paid by Londoners and everywhere else.
It says that, for example, the total 125,000 residential property transactions in London in 2018 accounted for just 11.3 per cent of the overall total of transactions.
But the stamp duty paid by London home buyers last year was £3.6 billion - which was 39.2 per cent of the total £9.2 billion SDLT receipts across the nation as a whole. The agency describes this as “disproportionate” and ”a financial penalty”.
It argues that transactions volumes in London have dipped 33 per cent in the last decade - from 186,000 in 2008 to 125,000 in 2018 - but during the same time the absolute volume of SDLT paid by London buyers stepped up 86 per cent from £1.9 billion to £3.6 billion.
It also analysed the next largest stamp duty regional bill - the south east of England - and says that area paid half the SDLT of London yet had a substantially larger proportion of the country’s transactions.
“Stamp duty is a tax penalty disproportionately aimed at London.” claims Benham and Reeves finance director Vidhur Mehra.
“Despite representing approximately just 1.3 per cent of England’s landmass, the capital is responsible for one-third of all property taxes by way of stamp duty” he continues.
“This is not just because London is home to the highest property prices in the nation, but also because at higher values the levy is now designed to penalise that sector harder in relative terms. Stamp duty is not only an outdated, archaic practice but a tax on aspiration, choking the upwardly mobile who happen to live where many of the best jobs and transport infrastructure are provided.”
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Markets should flow and there is something very wrong when the property market gums up as we lurch from one piece of tax speculation / change to the other. Let's be clear stamp tax is a bad tax, it inhibits flow, reduces transactions and charges buyers for the future privilege of owning a home, all are clearly wrong.
SDLT has been at the level where it has killed fluidity. For many, the stamp duty is their fist years salary lost net of tax so not worth moving. Half it at least.
Agree SDLT is a bad tax. 'First year salary' sounds like London. In most of the UK SDLT is tyypically about £2500-£5000. Most people(ie voters) do not care about the London market.
Not quite right, Foster. In banes itself, for a property around 600k with typical 3 bedroom houses priced between 350-500k depending on the area, SDLT is 26000, not 2500-5000. you are missing a zero in your response
I am trying to both buy and sell, but this idiot Chancellor has made me take the view that I sit tight now and do nothing. I might get caught twice and the cost could be horrendous if I sign up to buy now, then pay £43K as a buyer,then my purchaser waits until post-Budget and what then if the Duty then passes to the seller? A further £32K. No NO NO....so the market stagnates...just what everyone is trying to avoid....but our useless politicians have done it again!
There will be transitional arrangements to address exactly what you refer to. Don't hold your breath though.
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