Mortgages  

Calls for chancellor to scrap stamp duty

Calls for chancellor to scrap stamp duty

The TaxPayers’ Alliance has called on the government to undertake “real reform” to tackle the housing shortage in the UK and re-stated its demand that the stamp duty be abolished.

A new report from the lobby group accused successive governments of avoiding meaningful reform, focusing instead on tinkering around the edges, which has only served to worsen the situation and drive up prices.

It argued stamp duty is an unfair tax which stops people from buying their own home, settling down with a family, moving for work or downsizing

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“The recently implemented 3 per cent tax additional homes surcharge and new restrictions on finance cost relief will also advantage richer prospective buyers at the expense of poorer tenants,” it stated.

The TaxPayers’ Alliance suggested both policies distort housing markets, with implications for incomes, employment and overall welfare.

It called for a cancelling of the additional homes surcharge and restrictions on finance cost relief, with a halving and eventual abolition of the stamp duty altogether.

Planning restrictions should also be reformed, according to the think tank, to declassify some green belt land and allow taller, denser construction in urban areas.

Jonathan Isaby, chief executive of the TaxPayers’ Alliance, said for decades politicians have failed to tackle the root causes of the housing crisis: a chronic lack of supply.

“What’s more, stamp duty is still punitively high and gimmicky tweaks to the tax system will ultimately end up penalising tenants and increasing rents,” he commented.

“The new chancellor should now seize the opportunity to drastically simplify and reduce property taxes as well as liberalise planning restrictions, which prevent huge swathes of land from being built on for no good reason at all.”

The Residential Landlords Association’s chairman Alan Ward called the report a damning indictment of the government’s tax grab on landlords.

“Recent tax changes will see many landlords increase rents, this will make it harder for tenants to save for a deposit for a home of their own; it will go against everything the government claims it wants,” he stated.

“A tax system that encourages rather than damages housing supply would boost revenue for the Treasury and cut costs for tenants. Ahead of the Autumn Statement there is now an opportunity for the new government to think again about its tax on new housing.”

A report, published earlier this month by the House of Lords’ Economic Affairs Committee, strongly recommended the government lift its target by 50 per cent and build 300,000 homes each year in order to tackle the housing crisis.

While the new chancellor Phillip Hammond has so far been quiet on housing policy, the new housing minister Gavin Barwell outlined his plans for the role last week, aiming to work with a range of stakeholders to hit building targets.

peter.walker@ft.com