Pressure mounts on the Treasury to reform SDLT ahead of the Spring Statement
Cornerstone Tax discusses the pressure which is mounting on the Treasury to reform SDLT ahead of the Spring Statement.
According to new data from later-living provider Pegasus, just 14% of homeowners over 55 are considering downsizing, with over half of over-55s expressing that they wanted to remain in their current family-home post-retirement, a figure that increased to almost 70% amongst the 71-75 age bracket. When asked about the most significant barriers to downsizing, 35% specified the cost of stamp duty whilst 37% cited the overall hassle of moving.
According to David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading property tax advisory, the treasury ought to look at well-targeted reform to stamp duty as a means to bolster transactions and upward-mobility within the UK housing market.
Ahead of the government’s Spring Statement on March 6th, MPs have urged the chancellor to prioritise stamp duty 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 Lord Mandelson and Lord Heseltine which asserts that elderly homeowners should be exempt from stamp duty outright. All the while, SDLT revenue has taken a significant hit in recent months as transaction numbers continue to fall year-on-year, implying a self-perpetuating cycle.
David Hannah, whilst welcoming the renewed focus on stamp duty, claims that more attention ought to be brought towards stimulating the property market’s lower end.
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 being charged on homes valued between £250,000 and £925,000. However, with the current price of a UK home standing at £288,000, it’s clear that SDLT payment bands are long overdue an overhaul.
According to Hannah, those looking to purchase properties on the mid-to-high end of the property market will, in turn, have a chance to sell their low-end properties as a result of an increase in demand from prospective buyers, encouraging movement and generating momentum within Britain’s frozen housing market.
David Hannah comments:
“SDLT payment bands have been long overdue for an overhaul as they have never been index-linked to house price inflation.
“An increase to these thresholds would stimulate activity at 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 property market will now have a chance to sell their low-end properties as a result of the increase in demand from prospective buyers, contributing to further momentum within the housing market.”
Kindly shared by Cornerstone Tax
