Calls to either reduce or reverse stamp duty tax increases are growing, as industry insiders argue this would help get the market moving.
Calls to reverse or at least reduce stamp duty increases have been growing, with many saying the system needs to be amended to reflect what's happening in the market.
Stamp duty is hitting first-time buyers hard, especially in London, almost all of who are required to pay stamp duty as the threshold has been lowered to £125,000 from £250,000. The cost of stamp duty is also said to be discouraging people from downsizing.
But the stamp duty bill increases as the value of the property does, meaning prime London buyers and buy-to-let investors are hit with a higher bill for stamp duty.
There have been many changes to stamp duty in recent years, some of which have resulted in an increase in the amount of stamp duty payable on high-value properties. Key changes to stamp duty took effect in December 2014, when stamp duty on properties bought in excess of £1 million increased, and April 2016, when a 3% stamp duty surcharge was added to the purchase of additional properties.
High levels of stamp duty are said to be hindering movement in the market, whether that be a first-time buyer looking to purchase their first home in London or a buy-to-let investor looking to buy property in central London.
Adam Hesse, Land and Planning Director at broker Aston Mead, is of the opinion that stamp duty should be cut across the board to get the market moving: "Not only is stamp duty a tax on moving, it also reduces the supply of new homes. This in turn further contributes to Britain’s housing affordability crisis".
He continued: "the abhorrent levels of tax for buyers in the top price brackets means that those owners can’t sell, thereby stifling the market. "
While for first-time buyers saving for what will no doubt be the largest transaction of their lives so far, the burden of having to pay stamp duty is often too great a cost.
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