Stamp duty reform is needed as tax impacts older people and buy to let investors
Although the Government has already taken steps to limit the impact of stamp duty on first time buyers, the property tax remains a major barrier for older homeowners who want to downsize, it is suggested.
According to the Intermediary Mortgage Lenders Association (IMLA), there is a whole generation of asset-rich but cash poor people approaching retirement and downsizing is a great way for many of them to free up cash for later life.
Kate Davies, IMLA executive director, said:
‘Removing stamp duty for these so-called last time buyers would help those who want to downsize to move into smaller, more manageable properties for retirement. It would also increase the availability of larger houses suitable for growing families and ease the movement in our housing market.’
She also pointed out that in the buy to let market private landlords across the UK are under significant pressure from a layering of tax changes that includes the additional 3% stamp duty surcharge on additional homes.
Davies pointed out that the latest quarterly stamp duty figures from HMRC shows that the tax continues to deter many buyers from entering this market and prevents small scale landlords from investing to grow their portfolios.
‘It is critical that the Government puts the brakes on any further legislation that could restrict the Private Rental Sector (PRS). Our recent report on buy to let shows that this market could be topping out and measures like stamp duty are putting immense pressure on private landlords.
‘There are unintended consequences of squeezing the PRS in order to boost home ownership, not least driving up rents and limiting the choice for tenants across the country.’
The HMRC data shows that in the additional homes sector transactions increased by 3% to 52,700 in the second quarter of 2019 compared with a fall of 1% during the same period in 2018 and 62% of transactions in this sector were under £250,000 an increase of 1%, while transactions valued over £250,000 jumped by 8% over the same period.
Overall, transactions increased by 6% from 253,900 in the first quarter of 2019 to 267,900 in the second quarter. The HMRC report says that similar patterns have occurred over the same period of time for several years.
In the second quarter stamp duty receipts totalled £2,623 million, 1% lower than in the first quarter of 2019. This was due to a 19% fall in non-residential receipts and an 8% increase in residential receipts.
Some 52,600 transactions claimed first time buyers’ relief in the second quarter of 2019, making a total of 340,900 claims since the relief’s introduction. The estimated total amount relieved over that period is £804 million.
Kindly shared by Property Wire