Coalition urges stamp duty reform
Updated on 14 November 2009
A coalition of seven property groups is calling on the Government to reform stamp duty which it claims is distorting the housing market.
A number of heavyweight organisations, including the Council of Mortgage Lenders, the Building Societies Association and the Home Builders Federation, have thrown their weight behind the campaign.
The coalition was set up by the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA), which claim stamp duty is an "anachronistic" tax which limits flexibility in the housing market and should be modernised.
The group is calling itself the 1808 coalition, after the year in which stamp duty was first introduced, to highlight their belief that the tax is a "relic of another age".
Peter Bolton-King, chief executive of the NAEA, said: "The coalition believes that stamp duty is an anachronistic tax which, in its current form, is preventing a recovery in the housing sector. It limits market flexibility, creates regional inequality and its slab structure unfairly distorts the housing market. With the Pre-Budget Report due soon, now is the time for the Government to take action."
Stamp duty is currently charged at 1% of the purchase price on properties costing between £175,000 and £250,000, although this will fall back to ones costing from £125,000 from the beginning of next year.
People buying a property for between £250,000 and £500,000 have to pay 3% of the purchase price in stamp duty, while the tax is charged at 4% on homes costing more than £500,000. But commentators argue that the way the tax is charged distorts the property market, as people buying a home for £251,000 have to pay stamp duty of £7,530, while those buying one for only £249,000 pay just £2,490.
The coalition wants the Government to suspend the tax until the property market has recovered. It also wants it to reform it from the current "slab" system to a progressive one, under which the higher rates are only charged on the proportion of a property's price that is over the various thresholds.
The groups also want the level at which the tax starts to be increased well above the current £175,000 threshold and for the different thresholds to rise in line with inflation each year.
Michael Coogan, director general of the Council of Mortgage Lenders, said: "We urge the Government to announce a comprehensive and long-overdue review of stamp duty. Reform is needed of a tax that distorts the housing market."
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