Stamp duty is causing market supply to stagnate
Over a third of estate agents believe the housing market’s failure to move is being caused by stamp duty, reports myhomemove.
Ordinarily discussed in relation to first time buyers, stamp duty is a tax which affects nearly every home buyer in the country. However it is the plight of second time buyers, those looking for larger properties costing over £250,000 that is worrying estate agents.
37% of the estate agents polled by myhomemove felt that the stamp duty tier for second time buyers was putting potential movers off, and if reduced it could help to open up the market and get it moving properly for both first and second time buyers alike.
Dev Malle, Group Sales Director for myhomemove, explained, “The jump in stamp duty from 1% to 3% on properties over £250,000, means that even before a second time buyer commits to a property, they need to find a minimum of £7,500 for stamp duty. This is an awful lot of money that many buyers would rather invest in their current homes, rather than pass over to the treasury. We are now in a situation where the supply of affordable family properties, three and four bedroom houses, is dwindling because buyers can not afford them, and as such the market is failing to operate as it should.”
The last time the Government looked into the issue of stamp duty was back in 2011/12. The then Chancellor, Alistair Darling, suspended stamp duty for first time buyers, offering a two-year window in which to buy a property costing up to £250,000 without paying the 1% tax. This decision helped spark a flurry in the market, as people rushed to buy before the midnight deadline on the 23rd March 2012. As a result, myhomemove had its busiest day ever, completing 703 cases: the equivalent of one case per minute.
Continuing, Dev said: “The evidence that stamp duty does affect people’s decision to buy can be seen in the situation back in March 2012. The number of first time buyers rushing to complete before the stamp duty levy came back into force was incredible. If the Government is serious about helping the housing market to recover then we believe it would be in their interest to consider amending the stamp duty tier for second time buyers.”
“Another important consideration, which has recently been agreed in Scotland, is that of a progressive tax system compared to the slab effect currently employed across the UK. We believe this would help to even out the amount of tax people pay and in turn bring more family sized properties onto the market, to reduce the property supply pressure.”
Thank you to myhomemove for providing Moneypenny with this insightful article for our readers.