The future for Stamp Duty Land Tax - could it be reduced?

The cost of Stamp Duty Land Tax (SDLT) is being held responsible by many in the property sector as to why there may be hesitation when it comes to purchasing a property, particularly for first time buyers and those looking to downsize following retirement.  Emma Gilliland, Residential Conveyancer, reviews here why there are proposals for this to be reduced in the future and brought more in line with current market activity, and why it causes a barrier to the housing market.

What is Stamp Duty Land Tax?

All home owners are required to pay SDLT on their property if it is priced over £125,000 for residential properties and £150,000 for non-residential land and properties.  The price is on a tiered scale depending on the price of the property, as demonstrated below:

“In their Spending Review and Autumn Statement 2015, the government announced a Five Point Plan for housing, to promote low-cost home ownership for first time buyers,” explains Emma. 

The plan included pledges to:

• deliver 400,000 affordable housing starts by 2020-21
• extend the Right to Buy to Housing Association tenants
• accelerate housing supply and get more homes built
• extend the Help to Buy: Equity Loan scheme to 2021 and create a London Help to Buy scheme, offering a 40% equity loan
• charge higher rates of SDLT on purchases of additional residential properties, such as buy-to-let properties and second homes, from 1 April 2016

SDLT increase for additional properties

Figures have shown why the government may not be keen to reduce the rate of SDLT, as accountants Blick Rothernberg has stated that for the same number of property transactions as two years ago, the government has taken an extra £2billion in SDLT.  “The majority of this increase is likely to be explained by the 3% surplus on additional residences, and so the government must not be blinded by the increase in funds when considering the future potential for home owners buying a sole residence.  The question has also been considered of whether this increase, while obviously generating income for the government, is having an unwanted impact elsewhere, such as less investment in properties from those living overseas.”

Emma concludes, “While the governments’ plans demonstrate their commitment to the housing market, it does not necessarily address the recognition that SDLT does, for some, put home ownership further out of reach.  Even though a reduction in SDLT could lead to less income for the government, even though it would naturally lead to more homes being sold increasing the quantity of receipts of SDLT, it is vital they keep in mind the long term future for the market and opportunities for future buyers.”

If you are considering buying a property and have questions about SDLT, you can contact Emma on 01329 222099 or email conveyancingquote@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.