Big Three Calls for Stamp Duty Cuts

Three of Britain’s biggest housebuilders, including Taylor Wimpey, Barratt Developments and The Berkley Group, have each called upon Jeremy Hunt to reform stamp duty ahead of the Spring Budget on March 6th. Pressures ranging from the ongoing cost-of-living crisis, record interest rates and crippling deposit requirements have continued to weaken the UK’s housing market, dissuading would-be first-time buyers from making that big purchase amidst what many are calling a crisis of affordability. A cut to the rate of stamp duty for lower-priced properties and a reduced levy for sellers over the age of 60 looking to downsize would purportedly encourage market activity and rejuvenate a market that’s long been at a standstill. According to David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading property tax consultancy, the chancellor should use the Spring Budget as an opportunity to overhaul the current SDLT regime and reform the current ‘outdated’ thresholds in a bid to reinvigorate the market from the bottom-up.  

Ahead of the Spring Budget, MPs have urged the chancellor to prioritise SDLT reform as a means to generate new incentives within the market. One such proposal includes a prospective stamp duty cut for energy efficient homes, whilst others echo a report sponsored by Lords Mandelson and Heseltine which asserts that elderly homeowners should be exempt from stamp duty outright in a bid to encourage top-down movement via downsizing. All the whole, SDLT revenue has taken a significant hit in recent months as transaction numbers continue to fall year-on-year.

According to David Hannah, one easy fix for policymakers would be to reassess the current thresholds for stamp duty payment, homes that are valued at £250,000 or less are currently exempt, with a 5% levy charged on any valuation between £250,000 and £675,000. However, with the current price of a UK home standing at almost £290,000, it’s clear that SDLT payment bands are long overdue an overhaul. This problem is exacerbated in the capital, particularly amongst first-time buyers as the increased £450,000 threshold continues to decouple from the rising cost of starter homes, with prices leaping by over a fifth in just five years across certain boroughs, according to the Land Registry’s data. Index-linking payment thresholds to house-price inflation would, according to David Hannah, have the knock-on effect of encouraging those looking to move-up the housing ladder to sell their lower-end properties, stimulating demand amongst an overcrowded demographic and generating momentum within Britain’s frozen housing market.

David Hannah, Group Chairman of Cornerstone Tax, comments:

“SDLT payment bands have long been due for an overhaul as they have never been index-linked to house price inflation. An increase to these thresholds would stimulate market activity as the lower end of the property market and allow first-time buyers to reduce the amount they need to borrow, thus improving their affordability calculations.

“As we all know, a rising tide lifts all boats, those looking to purchase properties on the mid-to-high end of the market will now have a chance to sell their low end properties as a result of the increased demand from perspective buyers, contributing to further momentum within the housing market.”