As Chancellor Phillip Hammond continues to face increasing pressure to reform stamp duty, John Elliott, Managing Director of Millwood Designer Homes emphasizes his views on the impact of the tax regime on the property market:
The issue of stamp duty is continuing to have a profound impact on not only the top end of the market, but more recently, those seeking to move house generally. As I have expressed in the past, the current housing sector is in desperate need of a reduction in stamp duty payments, in order to stimulate and keep the market active, it is necessary for the Government to support all segments of the property chain allowing a variety of buyers to move onto and progress up the ladder and ensure it works as a whole.
New research from the London School of Economics and the VAT Institute for Economic Research, found the rate of home moving would be 27% higher if the levy was completely abolished. Consequently, stamp duty is acting as a significant deterrent to many home-buyers.
It has been clear in recent years that people are moving house less frequently than they used to and therefore ‘second steppers’ are often looking to future proof a ‘forever home’, in order to save on the amount of stamp duty payment they make in a lifetime. In addition, downsizers who recognise their current property is too big for their needs find the biggest barrier is moving costs. Many sellers are deciding against putting their homes up for sale and choosing to refurbish, causing paralysis in the surrounding market.
Also revealing extremely worrying results, Lloyds Bank stated that buyers paid over £8.3bn in stamp duty in England and Wales in the year to March 2017, in comparison to £4.7 billion for the same period in 2013. Since the reforms introduced to stamp duty tax in December 2014, although payments have nearly doubled, the number of house sale transactions overall has decreased significantly. At Millwood, we have made a conscious effort to provide a wider range of homes for buyers across the stamp duty thresholds. In particular, our Woodlands View development in Hastings has seen excellent success from a spectrum of buyers including first-time buyers and second steppers, who are making the most of the popular Help to Buy scheme.
Ultimately, buying and selling now costs too much money and the government must recognise that charging an extra 3% in stamp duty is slowing down the market and discouraging buyers. In order to stabilise the current situation, the government must work as one to keep the entire market moving. I believe it is absolutely necessary that the Chancellor should address cutting stamp duty in the upcoming Autumn Statement in November, with a view to abolishing it entirely in the near future.