The Chancellor George Osborne was accused last week of missing an opportunity to boost the housing market by failing to reform the “outdated” stamp duty tax in his Autumn Statement.
Many in the mortgage market want stamp duty to be reformed away from a “slab” structure to a more marginal system similar to income tax.
Under the current slab structure the duty is charged at the highest rate on the whole of the purchase price, including the parts below the threshold, whereas under the marginal system proposed by the CML the higher rate of tax would only be charged on the part that crossed the final threshold.
Presently, borrowers purchasing a home under £125,000 are exempt from paying stamp duty. It is then taxed at 1 per cent of the purchase price between £125,001 and £250,000; 3 per cent between £250,001 and £500,000; 4 per cent between £500,001 and £1m; 5 per cent between £1m and £2m and 7 per cent over £2m.
But while widely tipped for reform there was no mention of stamp duty in the Autumn Statement, leading many within the industry to reiterate calls for a major shakeup of the tax.
Countrywide chief executive Grenville Turner said that people buying properties worth under £250,000 should be exempt from paying the tax.
He says: “The Autumn Statement was a missed opportunity for the Chancellor to announce further measures to help first and second-time buyers, homeowners and the UK housing market as a whole.
“We handle more housing transactions than anyone else in the UK and as a result, we see first-hand the issues facing property buyers and home movers and one key issue is the stamp duty land tax system, which we believe in its current format is outdated and prohibitive to promoting growth in the housing market.”
Royal Institution of Chartered Surveyors was also disappointed that “long overdue” changes to stamp duty were ignored, especially with the amount of revenue generated from this is rising sharply.
RICS chief economist Simon Rubinsohn says: ”The government plans to collect more than £60bn over the next five years in stamp duty receipts from British householders.
”Moving away from stamp duty brackets to a marginal system would be a boost to those struggling with the cost of living and help boost the number of property transactions.”