In recent weeks, estate agents, surveyors, researchers and more have all called on the Government for reforms to Stamp Duty Land Tax (SDLT), amid concerns that the levy is increasingly having a negative impact on the market.
The Royal Institution of Chartered Surveyors’ (RICS) latest Market Survey, which was published last week, argued that the tax was proving to be a ‘disincentive’ for home-buyers and home-movers.
“SDLT makes purchasing, moving and making more effective use of stock costly at a time when we need all [of] these things,” one of the study’s authors said.
However, the group pointed out that any proposed changes to the existing tax system – whether to SDLT, Council Tax or otherwise – should be “considered carefully” in order to iron out any “disruptive consequences” which might have a further negative impact on the market.
A few days earlier, a damning report was published by the Centre for Economics and Business Research (CEBR), which found that SDLT was deterring some 45,000 house purchases every year by discouraging downsizing and buy-to-let investment.
More recently, calls to scrap the tax altogether have materialised, after a former Conservative treasurer told The Sunday Telegraph that dropping the tax completely would prove to be ‘cost neutral’ for the UK, as more homeowners would begin spending their money on home improvements.
Lord Stanley Fink sided with the RICS in arguing that SDLT is becoming a growing problem for the market. However, he went one step further by suggesting that high SDLT bills were preventing even the wealthiest homeowners from spending money on moving home or improving their properties.
He said that abolishing the tax would lead to a rise in the latter kind of spending, which would effectively balance the Treasury’s books if property tax receipts were to fall.
“If you look at transactions at the top end of the market it is clear the market is not functioning,” Lord Fink said.
“And I worry that having put the [stamp duty] tax on the purchase of homes, that for the first time, people are looking to rent rather than buy when they never would have before.”