Property and mortgage professionals have welcomed the Conservative’s pledge to abolish stamp duty if the party wins the next election.
Tory leader Kemi Badenoch today announced at the Conservative Party conference that she would abolish house purchase taxes on people’s primary assets.
Currently, stamp duty land tax is charged on people purchasing a property worth more than £125,000. First-time buyers are exempt from the tax unless their property is worth £300,000 or more.
The tax generates huge amounts of revenue for the government. Homebuyers paid £9.3 billion in stamp duty between January and August this year, according to Coventry Building Society’s analysis of HMRC figures.
However, it also prevents many people from moving – something that could affect the growth of the economy. Figures from the HomeOwners Alliance show that more than 800,000 homeowners have put their moving plans on hold in the past two years, with stamp duty a major barrier.
Paula Higgins, chief executive of the HomeOwners Alliance said: “We strongly support the Conservative Party leader’s call for the abolition of stamp duty. We have long campaigned to scrap stamp duty for people who buy a house to live in.
“Kemi Badenoch is right: it is a tax that traps households, hinders mobility and suppresses market activity. Home ownership is the foundation of a fairer and more secure society, but stamp duty has denied that opportunity to too many people for too long.”
She added: “By scrapping it we’re not just helping first-time buyers: we’re unlocking supply, freeing up shares, encouraging related transactions and moving the housing market. This will be a real vote-winner.”
Concerns about changes in stamp duty
But others thought the proposals were just that: a ploy to win votes.
Daisy Cooper MP, Liberal Democrat Treasury spokesperson and deputy leader, said: “No one will take the Conservatives seriously on the economy or the housing market with the Truss mini-Budget driven mortgage rates soaring for families across the country.
“The Conservatives had years to abolish stamp duty but have failed to do so. Instead, they have raised taxes on millions of people with their stealth income tax hikes, which the government must rule out a recurrence.”
And some were concerned that this could cause problems in the housing market in the run-up to the election.
Tom Bill, head of UK housing research at Knight Frank, backed the plans, but added: “The only downside is that if the Tories are ahead in the polls ahead of the next general election, the housing market could grind to a halt.”
The proposals come just months after a major change in stamp duty thresholds. In April, the Labor government saw the end of the stamp duty holiday – which had been introduced by the Conservative government and raised the thresholds for the value at which the tax was charged.
It means many homebuyers saw a jump in the amount of stamp duty they owed when they made their purchase.
Figures from Coventry Building Society showed that the £9.3 billion raised from stamp duty this year was a 20.6% increase on the £7.7 billion paid in the same period last year.
Nathan Emerson, CEO of Propertymark, said: “Earlier this year we witnessed the immediate impact of changes to stamp duty thresholds, with a rush to complete transactions in the run-up to April, followed by an immediate lull in the months that followed.
“Propertymark welcomes all proposals that increase consumer confidence and affordability, help streamline the buying and selling process, provide additional home buying options for those aspiring to buy, and enable and support people to secure a long-term permanent home that more easily meets their needs.”