Ditching Stamp Duty ‘to drive 70,000 more property sales a year’

Estate agents who suspect that they would have a lot more homes to sell if Stamp Duty were abolished or reformed have some new data to back them up.

Not-for-profit company Tax Policy Associates (TPA), which was founded by campaigning accountant Dan Neidle, says it has used official statistics to work out how many more homes would be sold if Stamp Duty was abolished.

Its figures are based on Office for Budget Responsibility projections that shows for every 1% Stamp Duty is reduced by, 7% more homes under £250,000 are sold, 4.5% for those between £250,000 and £1m and 6% more for properties over £1m.

Using the data underlying these figures, TPA says it estimates that houses around the around UK house price of £291,000 would see an uplift in transactions of 7%, and that overall some 70,000 properties would be sold every year if Stamp Duty were to go.

“Each of these deterred transactions has a cost, in reduced labour mobility, inefficient use of land, and reduced economic growth. We also shouldn’t forget the human cost: being unable to move house makes people miserable,” says TPA’s report.

“The effects aren’t limited to homeowners. Because SDLT depresses transactions, it reduces the rate at which developers at which developers can sell, therefore delaying their recycling of capital into new housing supply, and tightening the pipeline of new homes.

“So there is a powerful case for abolishing stamp duty.”

But the report also warns that abolishing Stamp Duty will create problems as well as solve them – namely that Stamp Duty raises too much revenue to be binned without a replacement – as Chancellor Rachel Reeves has flagged this week via her ‘leaked’ policy plans.

TPA says taxing principal home owners via CGT would be ‘as damaging as Stamp Duty – perhaps more so’.
Instead it suggests replacing the levy and council tax with an annual land value tax on the undeveloped value of land.

“Like any significant tax reform there would be winners (people who expect to move house) and losers (people who don’t). That could make it a hard political sell,” it says.

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Author: Gemma