The Chancellor has been urged to scrap Stamp Duty on all family homes in next month’s Budget to boost the housing market, help young first-time buyers, and encourage downsizers to move, as he seeks to turbocharge the economic recovery.
The Land Promoters and Developers Federation (LPDF) has called on Rishi Sunak to take urgent action to help the housing sector lead the country out of recession and deliver the 300,000 new homes needed each year.
Paul Brocklehurst, chairman of the LPDF, said: “We have written to Rishi Sunak and asked him to act immediately in relation to Stamp Duty on purchases of a principal residence, which is a family’s home. We believe Stamp Duty should be scrapped altogether.
“It is suffocating the housing market, as highlighted by the activity in the market with the current holiday, inhibits the ability of young people to buy without the need for parental help, contributes to reduced household mobility, which itself acts as a constraint on wider economic activity, and acts as a disincentive to downsizers.”
The LPDF has also suggested that revaluing and reforming the ‘regressive and distortionary’ Council Tax could help to deliver Boris Johnson’s leveling-up agenda as well as pay for the abolition of Stamp Duty paid by purchasers of their family home.
The LPDF, whose members include land promoters, major house builders, planners and leading law firms, is working with the Government, local authorities and communities to enhance the planning process, and help deliver the new homes the UK needs.
On Stamp Duty Land Tax (SDLT), the LPDF says:
There is currently an SDLT holiday on residential properties up to £500,000 in place until the 31 March. We would ask that the Chancellor consider scrapping all SDLT on the purchases of a principal residential property (the family home).
Academic studies for many years have highlighted that SDLT creates a highly dysfunctional, distorted housing market by reducing household mobility, acting as a disincentive to downsizers to move, and inhibiting the ability of young people (first-time buyers and second steppers) to buy without help from parents.
On Council Tax, the LPDF says:
Revenue lost to HM Treasury from Stamp Duty could be recovered by the reform of Council Tax. We support findings in the Institute for Fiscal Studies Briefing of March 2020, titled ‘Revaluation and reform: bringing council tax in England into the 21st century’.
Council tax is out of date (the valuation date being 1991), regressive and distortionary. It needs to be revalued and reformed. Reform could make council tax much more progressive, aiding the leveling up agenda. A tax proportional to value is likely to see a material redistribution in who pays and where they live to those areas that have experienced the most significant valuation growth in property since 1991 and to those who can most afford it.