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Stamp duty reform can revitalise housing market says think-tank

Raising the stamp duty threshold to £500,000 would remove 90 percent of property transactions from paying the duty.

That’s the proposal in a new report called Stamping Down from the think-tank the Centre for Policy Studies (CPS).

Raise threshold to increase sales

The report’s author is Alex Morton, a former adviser to David Cameron and now head of policy at the CPS.

He says abolishing stamp duty altogether or raising the threshold at which buyers pay the duty to £500,000 would increase the number of property transactions in England.

Such a move would also spur developers into building more homes because there would be no tax bill for buyers.

At the moment the average home buyer in England is paying £2,300 in Stamp Duty Land Tax. The biggest bill falls on those buying in the south-east where they must fork out more than £6,000.

‘Tax on mobility and aspiration’

The CPS report calls stamp duty a tax on mobility and aspiration. At the moment stamp duty brings in £5.1 billion every year in England.

However, the CPS modelling says raising the threshold to £500,000 would take 90 percent of transactions out of the duty’s reach and only cost the Treasury about £1.6 billion annually.

Its report says any change should only be for residential property transactions. Currently buy-to-let property buyers and those purchasing an additional home pay higher rates of stamp duty.

To offset any losses from hiking the threshold, the CPS is proposing a levy on non-resident overseas buyers purchasing property in England.

Bold action needed on stamp duty

Robert Colvile, CPS director, said: “It’s no coincidence that stamp duty is one of the taxes that people hate the most.

“It’s a huge barrier to people living in the kind of homes that best fit their families and their lives.

“And, as our report has shown, the current sky-high levels are doing more harm than good.

“We urge the Government to take bold action to stamp down on stamp duty and get the property market moving again.”

Stamp Duty Land Tax is levied on a sliding scale on all land and property transactions in England. Read more about stamp duty here. In Wales, buyers pay the Land Transaction Tax.