Stamp Duty Land Tax (SDLT) has always been a controversial topic and drawn many a comment from MPs, experts and campaigners.
Indeed, recent speculation on the topic focused on the belief that the Government would announce an overhaul of the tax in the recent budget.
An overhaul didn’t materialise however and the changes that were made, no Stamp Duty for first-time buyers on homes under £300,000 and on shared ownership homes worth up to £500,000, were dismissed as “tinkering around the edges.”
As well as disappointment over a lack of radical change, figures released alongside the budget, predicting a significant loss in revenue, are now only going to intensify the calls for change.
The figures, released by The Office for Budget Responsibility, have predicted that Stamp Duty receipts will be £3.8 billion lower than previously thought from 2018 to 2023, a significant loss to the public purse.
Critics claim one of the main reasons for the reduction in government revenue is down to the decision by former chancellor George Osborne to raise the levy on homes worth more than £937,500 to 10% of the sale price, which has seen the cost of buying a £1.5m home jump from £18,750 to £93,750 and to £153,750 on a £2m home.
Although aimed at calming the surge in house prices and to raise money for the Exchequer, the hike is seen as prohibitively costly and a major reason for the slowdown in the housing market.
Many also argue that Osbourne’s changes have created a huge bottleneck in the housing market, particularly in London and the South-East where families are finding it considerably cheaper to extend where they currently live rather than move and as a result people in homes further down the ladder cannot move up.
Indeed, a report by Barclays Mortgages highlights that 54% of homeowners would now rather improve their property than move.
Conservative MP Greg Hands, a former Treasury minister and a key campaigner for Stamp Duty reform, has gone as far to say it is a “tax on mobility”.
So what reforms are being called for?
Many claim, including the Association of Accounting Technicians (AAT), that a reform in who pays the levy is needed with sellers rather than buyers paying, which would at least mean less of the burden falling on people trying to move up the housing ladder.
Phil Hall, AAT’s head of public affairs and policy, has said: “It’s widely accepted that Stamp Duty adds a burden to any homeowners seeking to move - especially first-time buyers - because they must pay the tax as an immediate upfront cost together with finding a deposit, surveyors and solicitors fees and so on.”
Although critics of this argument claim that sellers would just add the cost to the prices they ask for, which would be the same end result for the purchaser.
Luke Murphy, of the Institute for Public Policy Research has said: “Stamp Duty is an example of a bad tax. It acts as a barrier to those that want to buy their first home and generally discourages the selling and buying of property, reducing the incentives for people to move home.
‘We have called for Stamp Duty to be replaced by a more progressive annual property tax which would be simpler and fairer.
‘It would also make the housing market more efficient.” Another idea proposed is to remove or reduce Stamp Duty for older homeowners, which could offer an incentive for those in later life to downsize and as a result make more larger properties available for families.
Other ideas that have been proposed include lifting the threshold at which the tax starts, more special provisions for first-time buyers and even introducing an incentive to encourage more energy efficient homes with a variable rate on a sale for those who have insulated their properties.