On the day that stamp duty thresholds revert to their previous higher levels, the Tony Blair Institute has called for wholesale property tax reform.
The institute’s director of economic policy, Tom Smith, says: “From today home buyers in England and Northern Ireland will pay more stamp duty when temporary reliefs come to an end.
“While these changes are necessary given the state of the public finances, they mean many people will be paying thousands of pounds more to buy a home, and for some people – such as first-time buyers – this change may mean they aren’t able to purchase a home at all.
“Stamp duty is long overdue reform. As we have previously set out, households should be allowed to spread stamp duty payments over 20 years through a government backed loan.
“Crucially, any household that moved within 20 years would not need to pay off the remainder of their loan. This would remove the upfront tax penalty on mobility, encourage labour-market flexibility and support growth by making it easier for people to move for work.
“Council tax for households across the UK will also increase from today with figures showing that households in the North East of England face paying £444 more in council tax on average than those in central London.
“Replacing the existing council-tax system with a capped proportional levy set at 0.5 per cent of up-to-date property values would help address this imbalance. It would also incentivise homeowners in larger, underoccupied properties to downsize, improving housing-market fluidity and supporting economic mobility.
“These are the sort of radical changes government should be making to kick-start economic growth.”
And commenting on the Stamp Duty threshold changes Toby Leek, President of NAEA Propertymark, states: “Some will be disappointed that they were unable to complete quickly enough to avoid paying extra Stamp Duty, leaving many with the extra burden to find on average an extra £2,500 in order to move home.
“Moving forward, however, the extra cost may be adsorbed within the price of properties therefore raising the overall price marginally but remaining within affordable limits for many people especially given mortgage products coming to the market continue to improve, with sub 4% products now available.
“As this improves this will hopefully continue to enable people to step onto the ladder for the first time or move home more freely as we move into the summer months, which is a traditionally busier time for the housing market and presents buyers and sellers with much more options.
“For some though, home ownership aspirations are unrealistic and the growth in the amount of a deposit needed which is, on average, around £50,000 is too far out of reach.
“Therefore, the UK Government needs to urgently review the Stamp Duty value bands to reflect average property prices and ensure any current or future measures to help first time buyers including saving ISAs are available, fit for purpose and consider house price inflation.”
