Stamp Duty reforms vital to stop market going into freefall

From Frances Scanlan

Mortgage Strategy is to be congratulated for the momentum it is creating for Stamp Duty levels to be reformed. We are entering that pre-election period when opposition parties will seize on any issue that will make them more popular with voters. The Conservatives have cottoned on to the fact that Stamp Duty is an emotive issue and has issued its “Five options for making Stamp Duty fairer”. Hopefully this will help focus the Treasury on acting to raise the entry levels for this tax – as a vote retaining measure if nothing else. But the ominous absence of a mention in Gordon Brown’s pre-Budget report might mean he intends to ignore the issue.

So far, the arguments have centred on the unfairness of the tax, especially for first-time buyers. I would like to make a plea for all Stamp Duty campaigners to focus, in addition, on the bad effect that this fiscal constraint will continue to have on the mortgage market in general.

At a time when house prices are starting to stagnate we are seeing mortgage volumes considerably lower than 12 months ago (17% according to the CML and 15% according to the BBA). If this continues we will see our business volumes fall at a time when we need to start recouping some of the expenses incurred by becoming compliant for FSA regulation.

Let’s have sympathy for first-time buyers but at the same time we should be lobbying for Stamp Duty reforms on the commercial grounds of helping to stop the property market from going into freefall, and no doubt taking some intermediary businesses with it.

Frances Scanlan
CEO
Knight Funding
By email