Stamp Duty - The Tory's plan

Gorgeous_George

I hear that the Tories, in a desparate attempt to woo new voters, are planning to ease the burden of Stamp Duty for FTBers. I think it is a great idea and long overdue. Unfortunately, it only applies to houses upto £250K. That covers a whole street in Middlesbrough or a postage stamp sized flat in a posh part of London.

Why not can Stamp Duty altogether for houses under a certain square footage? It has no justifiable reason for being nased on price. A 'normal' house that changes hands every two years could bring in £20,000 over 20 years whereas a council/HA house or BTL, that changes tenants a similar number of times, would bring in nothing.

GG

Turnbull2000

This is another populist damp squib, designed to perpetuate an inflated market by supposedly appeasing the Tory middle-class home-owners and struggling first-time-buyers simultaneously.

Beyond the hype, there is nothing in this policy that's of any real help. We already know that Cameron wants to avoid the possibility of lower prices through his endorsement of shared-ownership, and only a fool would believe no stamp duty would solve FTB affordability issues. And yes, I view Cameron as a fool.

And how on earth would they identify genuine FTBs? Will this be done through credit history?

I honestly can't remember both major parties being so utterly un-voteable in my lifetime - though I'm only 28

Generali

It's a classic 'must be seen to be doing something' policy. It's rubbish (although generally I support less tax as opposed to more tax).

What to do about FTB affordability? Wait for the bubble to burst. It's a bit sh1tty in the meantime but there isn't any realistic alternative. There's no particular shortage of housing (except perhaps family houses in parts of the South East), it's just that people have been given the wherewithall to borrow vast sums of money at very low interest rates.

Once that goes.......pop!

theGrinch

i would rather have it graduated instead of jump at £250k and £500k. To make up any shortfall, I would look at closing the loophole of property held in companies paying 0.5% or 0% stamp duty.

dolce_vita

This plan, along with all other schemes like shared ownership and
key-worker is a disgraceful attempt at propping up the housing market and will do nothing to solve the problem.

The problem is high prices.

epz_2

joy, house prices will just jump up by 1% as people pay what they can afford, in the mean time taxes go up to raise the extra 4 billion odds the treasury loses.

it seems like a no win, everybody lose situation.

can we please have a real opposition, it would be nice to have a viable alternative in a democracy.

theGrinch

unaffordable prices is the result.

the problem is supply shortages in the housing stock so some house building announcement akin to mcmillan would be sensible.

Libra1975

theGrinch wrote: »

i would rather have it graduated instead of jump at £250k and £500k. To make up any shortfall, I would look at closing the loophole of property held in companies paying 0.5% or 0% stamp duty.

I'm with you on this one, gradution is the key (if we have to have the tax at all). A jump of 5K between 250K and 251K just causes price distortion for houses worth between 250K and 270K.

michaels

Was thinking hard about stamp duty as I really dislike it as a tax even without the crazy banding...why should we pay a large sum to the government to move houses - no wonder everyone tries to commute and the roads and public transport can't cope so here is mt manifesto promise:

Scrap stamp duty and replace with capital gains tax payable by the seller.

The only rationale I can see for a tax on property is to try to capture some of the gains holders of property make because of supply constraints and redistribute these. Hence if someone gets a new job and wants to move they pay rpi indexed tax on any capital gain. Yes this tax would not be a constant cash cow for the government but it would actually act as a natural stabilizer, slowing things down during a boom and not during any crunch.

Phase it in stepped over 5 years with current valuations as a baseline and there will be no immediate dislocation.

Would be interested to hear others thoughts.

Hereward

michaels wrote: »

Was thinking hard about stamp duty as I really dislike it as a tax even without the crazy banding...why should we pay a large sum to the government to move houses - no wonder everyone tries to commute and the roads and public transport can't cope so here is mt manifesto promise:

Scrap stamp duty and replace with capital gains tax payable by the seller.

The only rationale I can see for a tax on property is to try to capture some of the gains holders of property make because of supply constraints and redistribute these. Hence if someone gets a new job and wants to move they pay rpi indexed tax on any capital gain. Yes this tax would not be a constant cash cow for the government but it would actually act as a natural stabilizer, slowing things down during a boom and not during any crunch.

Phase it in stepped over 5 years with current valuations as a baseline and there will be no immediate dislocation.

Would be interested to hear others thoughts.

A capital gains ttax would work well in a rising markets, but would generate little tax in a falling one. If you want ot reform Stamp Duty, making it payable by the seller rather than the buyer. THis way those would leave the market have to pay their share and those that are entering are not penalised.

michaels

Hereward wrote: »

A capital gains ttax would work well in a rising markets, but would generate little tax in a falling one. If you want ot reform Stamp Duty, making it payable by the seller rather than the buyer. THis way those would leave the market have to pay their share and those that are entering are not penalised.

Hmmm - while psychologically it sounds better that the seller pays in reality the level the market settles at includes the transaction costs whoever actually writes out the cheque.

The point re revenue, I see as a benefit. In boom times it is a break on the economy, when prices are falling less so - plus it is a stocks and flows thing, even in a falling market there will still be lots of properties which have been held long enough to be showing a gain.