A major agency is warning that the current stamp duty holiday could leave the housing market in a state of lethargy when tax levels bounce back to normal next spring - but could well prompt a review of council tax instead.
Chancellor Rishi Sunak introduced the holiday last Wednesday, exempting properties selling for £500,000 or less from any stamp duty; since that time agents say they have been busy with buyers registering to take advantage of the initiative.
However Tom Bill, London residential research guru at Knight Frank, says SDLT has now clearly become “unsophisticated” in the sense that disincentivises spending.
In the agency’s latest review of the market, Bill writes: “We are now in a position where the two central London boroughs of Westminster and Kensington & Chelsea provide as much stamp duty revenue as the counties of Buckinghamshire, Hampshire, Kent and Hertfordshire combined - none of which are known for low house prices. That doesn’t feel like a particularly sophisticated approach.”
And he continues: “What will happen at the end of the [stamp duty] holiday? You know how inactive you feel after two weeks on the beach, and the property market could prove equally lethargic in Q2 next year.”
He says it may be time for the government to consider reforming council tax instead, so giving it a regular flow of predictable income instead of relying on stamp duty, which varies significantly according to activity in the housing market - itself a function of varying levels of confidence in the wider economy.
Reforming council tax would be “a tough undertaking” admits Bill - “but now feels like the right time to tackle it.”