April 2010

Thank you Darling!

NAEA hail Stamp Duty victory

THE National Association of Estate Agents has welcomed as a major victory Alistair Darling’s decision to raise the threshold of stamp duty land tax for two years.

 The NAEA has long campaigned for a major rethink on stamp duty – which it believes to be a tax on aspiration.

In the final Budget before the election, Mr Darling listened and raised the threshold to £250,000 – to the general delight of the entire estate agency industry, although there are called for the entire Stamp Duty system to be changed.

 Peter Bolton King, chief executive of the NAEA, said: “For thousands of first time buyers the dream of getting onto the property ladder was slipping out of reach.

 “This announcement has added a new rung to the property ladder, one within reach of thousands of young families.

 “We have long argued that stamp duty is a tax on aspiration that smothered the natural demand of the market. We still believe that more reform is needed and there is more work to be done, but this is a good first step – a major victory for first time buyers.”

 The NAEA has for years called for a major reform of stamp duty land tax, beginning with the threshold being raised.

Most recently in the run up to this Budget the association led a coalition of property organisations in calling for reform, under the banner of the 1808 campaign, named after the year when the tax was first introduced.

 Meanwhile, commenting on behalf of the Royal Institution of Chartered Surveyors, Simon Rubinsohn, chief economist, said:

"Measures to help boost the housing market are welcome and will benefit a significant number of buyers, removing 50 percent of transactions from the stamp duty system. Based on our assumptions about activity, RICS estimates that raising the initial stamp duty threshold will cost the Government around £750 million.

"Recent surveys of RICS members have suggested that the number of transactions should increase through a cut in stamp duty at the lower end of the house price range. In particular, this change to stamp duty could help transactions rise above 1 million for the first time since 2007, although this is still well below the 1.7 million transactions that were taking place at the height of the market. Any impact on the market will be limited by the ongoing lack of housing supply and restricted mortgage lending.

"RICS believes that greater reform of stamp duty is still needed. The current slab structure, where a higher rate applies to the whole value of a transaction, should be replaced with a marginal system similar to income tax.

“This would smooth out distortions in the market and can be done on a revenue neutral basis. The Government should also consider reshaping the tax by introducing a new band for higher value properties."