A former Conservative minister has called on the party to include proposals for regional stamp duty thresholds in its election manifesto.
Currently, stamp duty is levied on all properties worth more than £125,000 at a rate dependent on their value.
Speaking to Money Marketing, former Children’s minister Tim Loughton says higher house prices in London and the South East mean people in these regions pay more stamp duty than people with similar properties in other parts of the country.
Last month, research from Lloyds Bank suggested the Government has seen an extra £1bn in revenue from the levy because of increasing house prices.
Loughton, who is MP for the Sussex constituency of East Worthing and Shoreham says: “I would like to see many more people taken out of stamp duty altogether by raising the lower threshold. There could be cap so that an average family wouldn’t pay disproportionately more.
“It should absolutely be part of the manifesto but I would like to see it come out at the next Budget.”
John Charcol senior technical manager Ray Boulger says Loughton’s idea is reminiscent of efforts by former Labour chancellor Gordon Brown to reduce stamp duty for disadvantaged areas. In the late 1990s, Brown introduced a new starting threshold of £150,000 for disadvantaged areas that were identified by the first half of their postcode.
This has since been dropped by the coalition Government.
Boulger says: “However you identify these areas you are going to include in most cases widely divergent areas. In the changes brought in by Gordon Brown, Holborn was identified as disadvantaged. Now maybe parts of Holborn are disadvantaged but certainly all of it is not. The logistics of making regional stamp duty work would just be ridiculously complicated.
“It would be much better to move the system away from the slab system.”
Advies Private Clients IFA Alex Reynolds is based in London. He says: “It would be very welcome here because stamp duty is huge for people buying in London and it is stopping people moving.
“But I think it would be a suicidal policy for the Conservatives to have in their manifesto. The other parties would just say they are doing it for all their friends who buy expensive houses. It would have to be very carefully targeted and that means complexity.”
Cardiff-based Neil Soundy Financial Services’ managing director Neil Soundy agrees the policy would not go down well in those areas which do not benefit.
He says: “As it stands it is a fair and transparent tax that everyone understands. If you start introducing regional elements it gets far more complex. This would basically be a postcode lottery and will mean drawing boundaries where people on one side of the street will benefit and other will not. I think it will be quite divisive.”
Last month, the Institute for Fiscal Studies said stamp duty is one of the worst designed and most damaging taxes and serves as a drag on the housing market.