Budget 21: Industry calls for long-term stamp duty reform to stimulate economy
Budget 21: Following Chancellor Rishi Sunak’s announcement that the stamp duty holiday will be extended until 30 June, with the threshold then reduced to £250,000 until the end of September, Redrow has called for the need to review this tax in the long-term.
Matthew Pratt, group CEO of Redrow, said: “The stamp duty holiday extension will be welcome news to those buyers caught up in the homebuying process and who may have otherwise missed out on a saving, and the element of tapering between June and September will also be welcome to a number of new market entrants.
“However, in the medium-term and beyond October, we would like to see wholesale reform of this tax, as stamp duty outside of the current holiday is a barrier to people moving home, and it shouldn’t be.
“Facilitating mobility is especially important to the UK’s recovery as we move out of the COVID-19 lockdown and people find themselves needing to move due to job changes and other important life stage reasons.”
Home moves should be encouraged, he added, due to their stimulating effect across the industry, from furnishing businesses to moving companies and tradespeople, which is more desirable than the gains to the Treasury through stamp duty.
Pratt added: “We would encourage government to consider permanently reducing the current stamp duty tax bands across all levels, including the higher bands, and we believe the abrupt leap from the 5% to 10% tax band is particularly prohibitive.
“A lower, flat rate of tax across homes of all value would be much simpler and far less restrictive.
“It is right that first-time buyers get more support than others on paying stamp duty through any new regime as they don’t currently have any equity built up.
“For a functioning housing market people have to move up and down the ladder, and the need to find significant sums of money can prevent those at the top of the property ladder from moving to a more appropriate home for their requirements, and freeing their current larger property up for a family.
“Sideways moves are often crucial for people who might be moving away for job or life stage changes, and the current stamp duty levels can stifle a choice which can massively improve people’s lives and open up options.”
Mark Arnold, CEO of Kensington Mortgages, added: “The stamp duty threshold extension and phased reduction is great for those still transacting.
“However, we fear that there will merely be another cliff edge in September, as homebuyers rush to complete amid a flurry of activity, causing conveyancing bottlenecks.
“We hope that the Chancellor has still left permanent reform of the thresholds on the table, and that we are simply on a journey towards this.
“Even if the threshold was maintained at the £250,000 it would still be beneficial to all parties, including the Treasury.
“Research we commissioned suggests that a £250,000 threshold would deliver a tax surplus of up to £540 million compared to the £125,000 level.”
John Goodall, CEO at Landbay, said: “The extension of the stamp duty scheme is good news for landlords and anyone wanting to purchase a property. It will certainly enable all of the purchases currently in the pipeline to get over the line.
“Longer term, the government really needs to look at reforming stamp duty more broadly as this archaic tax distorts the market.”