The chancellor of the exchequer has rejected reports he will switch stamp duty liability from the buyer to the seller, stating that although housing needed “bold measures”, this was “not one of them”.
In a tweet, published yesterday (August 18), Sajid Javid wrote: “I never said...I was planning to put it on sellers, and I wouldn’t support that.”
The chancellor’s tweet came after multiple reports, stemming from an interview in The Times, said he was interested in “simpler taxes” and indicated he had not ruled out switching the liability of stamp duty to the seller, not the buyer.
The policy was said to be have been favoured by prime minister Boris Johnson during the Tory leadership campaign by the Association of Accounting Technicians, which told FTAdviser that when Mr Johnson had met with the group he appeared interested in pursuing the idea further.
But the policy has come under criticism from some, who argue a switch would mean even fewer people would be willing to downsize — seeing as they would bear the brunt of the stamp duty costs on the more costly property — and that sellers would simply factor the price of stamp duty into the price of the property, meaning the policy switch would do little to help buyers.
Mr Javid has since said he is aware of the need for "bold measures on housing" from his time as secretary of state for housing, communities and local government, but confirmed switching liability was not a measure he was pursuing.
Currently, stamp duty costs fall on the buyer. Stamp duty is owed on the purchase of all properties worth more than £125,000 and works on a tiered basis depending on how expensive the property is.
In 2014 former chancellor George Osborne abolished the "slab" system and replaced it with similar to income tax, meaning each rate only applies to the part of the property price that falls within that band.
Since 2017 first-time buyers have been exempt from stamp duty on properties worth up to £300,000 while those purchasing properties between £300,000 and £500,000 save £5,000 in stamp duty costs.
But the relief for first-time buyers has done little to quell the notion that stamp duty is in need of reform or even abolition.
Earlier this year (May 7), an over-50s holiday and insurance provider, Saga, called on the government to give downsizers a stamp duty break after its research showed 25 per cent of over 50s were struggling to afford the cost of moving house.
Kay Ingram, director of public policy at LEBC, has also backed this idea. She said: “Stamp duty is now a significant cost to all but first time buyers.
"There is evidence that the high levels of stamp duty are putting older homeowners off downsizing as well as presenting a substantial barrier to second and subsequent home buyers.
"This leaves families at all stages in life occupying property that no longer meets their needs and slows the economic growth associated with a functioning housing market."