November 2009

NEW CALL TO SCRAP STAMP DUTY

A PROPERTY sector coalition is urging the Government to abolish the “anachronistic” Stamp Duty Land Tax, which it views as “a tax on aspiration”.

According to the ‘1808 Coalition’, of which the National Association of Estate Agents is a prominent part, Stamp Duty should be reformed because its ‘slab’ structure unfairly distorts the UK’s property market.

An overwhelming majority of the UK’s estate agents — 86 per cent — feel that the tax is unfair, according to the Coalition, which also involves the Council of Mortgage Lenders, the Homebuilders Federation and Shelter, along with the NAEA’s National Federation of Property Professionals stablemate, the Association of Residential Letting Agents.

Additionally, 81 per cent of agents believe that an announcement by the Government to reform Stamp Duty would have a very positive effect on the beleaguered property market.

The current Stamp Duty “holiday” for properties worth £175,000 or lower is due to expire imminently but 91 per cent of estate agents surveyed feel it should be extended.

The 1808 Coalition has been formed by the NAEA and ARLA to address the issue of “modernising” Stamp Duty in the run-up to the Pre-Budget Report.

It is named after the year the Duty was first introduced on UK property sales, and highlights its position as a “relic” of another age that fails to recognise the modern British property market.

Peter Bolton King, chief executive of the NAEA, said: “Stamp Duty is a barrier to entry for many first-time buyers and is also prohibitive for those looking for a step up the property ladder. In addition, it unfairly penalises those investing in buy-to-let portfolios, who have to pay Stamp Duty on the bulk price when individual buy-to-let investors pay a lower rate on the individual unit price.

“The time has come to re-assess Britain’s most unpopular tax, which is a levy on those aspiring to own their own homes and is manifestly perceived by all those who pay it as being unfair and punitive. Now is the perfect time to produce a fairer tax that recognises the challenges that modern house buyers face.”

The Coalition point out that the tax yield from residential Stamp Duty has grown ten-fold since 1996/97. Between 1997, the year the current Government came to power, and 2008, receipts from Stamp Duty grew from £675 million per annum to £6.68 billion.