New research shows both significant numbers of first-time buyers and existing homeowners would accelerate moving plans if there was a temporary stamp duty ‘holiday’.
This research – by Aldermore Bank – puts more pressure on the Chancellor to consider changes to stamp duty land tax in next week’s Budget, to relieve pressures in the housing market.
The survey of more than 1,400 homeowners or prospective FTBs found 30 per cent would accelerate plans to buy a home to take advantage of a stamp duty holiday.
In addition, a fifth (22 per cent) of homebuyers who had bought in the last three years would consider moving if stamp duty was cut for a limited period.
Around one in six (15 per cent) of those who bought four or more years ago said a stamp duty holiday would incentivise them to move.
These survey results come after a study by the Family Building Society and the London School of Economics concluded that stamp duty was contributing to a “dysfunctional” housing market, particularly in London and the South East.
It is feared that these tax is causing affordability problems for those trying to get on the housing ladder, as well as disincentiving older borrowers who are considering downsizing.
The Exchequer raised a record £8.6bn from SDLT in 2015-16, an increase of 17 per cent on the previous year. But much of this increased revenue has been from the surcharge levied on buy-to-let and second properties.
Over the same period there has been an 8 per cent drop in residential property transactions. In London 30 per cent of the SDLT collected was from the 2 per cent of properties prices at £1m or more.
Aldermore’s commercial director of mortgages Charles McDowell says a stamp duty holiday had the potential to “kick-start” the housing market.
He adds: “With the property market at risk of coming to a standstill we would welcome any plans, temporary or otherwise that reduce stamp duty.
“A reduction in stamp duty would be particularly beneficial for FTBs who are struggling with an overly complex and costly system.”
The survey also asked prospective FTBs and existing homeowners what other measures they would like to see in the Budget to improve the housing market.
Around 40 per cent of respondents wanted the Chancellor to commit to building more social housing; 39 per cent wanted a SDLT exclusion for first-time buyers; 35 per cent suggested a similar exclusion but for those downsizing; while 30 per cent wanted to see the Government relax inheritance rules.
McDowell adds: “We want to see housing at the top of the Government’s agenda in next week’s Budget. Whilst it would be great for there to be changes to the tax system, this can only have a limited impact. The underlying issue remains that more affordable houses need to be built.”
Family Building Society chief executive Mark Bogard says there was “no doubt” that SDLT was “suffocating the housing market.” He adds: “The Government should recognise that the housing market is a shambles and that supply simply isn’t meeting an ever-growing demand.”