Targeted stamp duty cuts could help to solve the housing crisis, a leading property association has said.
Jonathan Rolande, from the National Association of Property Buyers, said a blanket cut to stamp duty would not have a positive impact on the market. But more specific measures to encourage certain buyers could be vital.
His comments come as it emerged millions of homeowners who would like to downsize are being put off because of the expense of moving and stamp duty.
A new survey suggests more than a quarter of homeowners now want to downsize in retirement – so they can live in smaller, more manageable properties and free up extra cash for basic spending needs and luxuries.
According to wealth manager Hargreaves Lansdown, 22% say they have not been able to make this move because it is too expensive – and a further 13% blamed the cost of stamp duty in particular. An additional 12% said they wouldn’t free up enough cash to make it worthwhile. Explaining how stamp duty cuts should be targeted, Jonathan said:
“Putting more money into the pockets of buyers encourages them to purchase a home and allows them to offer more to the seller. And that is the problem. As we have seen with previous cuts to the rate, including the post-Covid Stamp Duty Holiday, very quickly, sellers ‘adjust’ their prices to reflect the new spending power of their potential buyer.
In other words, any savings are quickly eroded. The market heats up and prices rise. We saw it in 2021 and we will see it again.“In the short term it is a tempting ‘fix’ but it creates long term issues that make unfairness in the market worse. I do not advocate a blanket reduction, but if targeted to certain, stagnant areas of the market, a Stamp Duty reduction can be a useful catalyst to get things moving again.”
One Response
Ridiculous. Stamp Duty reduction is a short-term issue that does not solve any long-term housing/conveyancing issues. The average house price in the UK is £306,000.00 meaning stamp duty on that is £2800.00. Frankly, if a property purchase is dependent on someone saving £2800.00 then they should not be buying in the first place. A long-term conversation about stamp duty, the merits of it, the people it should benefit, those who are subject to and the amount it brings into the treasury is needed not populist policies designed to win elections.