The Royal Institution of Chartered Surveyors (RICS) has called for a stamp duty cut to “rebalance the UK housing market and reignite activity across all tenures”. The petition, which forms part of calls for a more comprehensive housing tax overhaul, follows the publication of the latest RICS Residential Market Survey.
The survey is used by the government, the Bank of England and other key institutions as an indicator of current and future conditions in UK residential sales and lettings. RICS professionals’ input into the survey.
The latest findings demonstrate that nearly 50% of respondents believe that tax incentives would encourage downsizing. RICS concurs that those with larger homes should be incentivised to move into smaller properties by exempting them from stamp duty.
Respondents also believe that changes to stamp duty and council tax would help thousands more young people own their own home. Not least because existing housing stock would be distributed more efficiently. Ultimately, RICS feels that these changes would see people become better matched to their housing needs, benefiting the entire housing chain.
However, despite the calls for reform, getting rid of stamp duty entirely and adjusting council tax rates to account for lost revenue was seen as a viable option by fewer than 20% of respondents.
Commenting on the latest survey results Abdul Choudhury, RICS policy manager, said: “It is not surprising that our professionals feel that residential property taxation is out of kilter. If we consider tax in terms of how they disincentivise certain behaviours, SDLT makes purchasing, moving and making more effective use of stock costly at a time when we need all these things. Council taxes, on the other hand are woefully out of date and are highly politicised.
“Any changes to the system of tax should be considered carefully, as they would have disruptive consequences that could negatively impact activity. Providing an SDLT exemption for downsizers could free up larger, underused properties; but will likely provide them with a market advantage over other participants. Similarly, replacing SDLT with council could increase house buying and selling activity; but increase day-to-day living costs at a time when occupiers are already facing higher bills.
“However, given the state of the housing market, it would be prudent for the government to consider the cumulative impact current taxes are having on behaviour and determine what changes can create a more sustainable and vibrant property sector. We would therefore urge the Government to undertake a full-scale review of the SDLT system – starting with what it hopes to achieve from this tax in terms of revenue generation, market fluidity or another objective.
“It is imperative that the Government recognises that markets need time to adjust to alterations to tax regimes as inconsistency is not conducive to the stable market that buyers and investors need. SDLT has seen a number of changes in recent years, with the market struggling to adapt to one change before another is introduced.
“Given that RICS professionals are front and centre of the residential market, we will be developing a critique of the housing buying tax options available to Government in the near future.”
Further recommendations from RICS include extending the Government’s Help-to-Buy scheme past the current 2021 deadline for first-time buyers.