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Govt urged to make sellers pay stamp duty

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Yorkshire Building Society is urging the Government to reform stamp duty and make it paid by sellers, not buyers.

The lender says this would help affordability for first-time buyers and save those in England, Wales and Ireland an average £3,791, with Londoners saving £13,171.

Yorkshire will send a formal submission to the Government today on what should be included in the Chancellor’s Autumn Statement.

Those buying bigger houses would save £4,093 on average, rising to £9,762 in London.

A total of 225,200 first-time buyers paid stamp duty in the year to June, having bought a property above the £125,000 minimum threshold, representing 75 per cent of all first-time buyers.

The lender says its sellers paying stamp duty would lead to an extra 16,000 property sales in the first year of being implemented as a result of a 2 per cent increase in overall transactions.

Yorkshire says this would include 6,000 first-time buyers.

The lender says new build properties for owner occupation could be exempt from the rules, ensuring the supply of homes is not prevented by the additional tax.

Yorkshire Building Society chief economist Andrew McPhillips says: “More than 200,000 first-time buyers paid stamp duty last year and removing this tax burden from them would give the younger generation a major leg up the property ladder.

“The benefits would not only be felt by those looking to get on the property ladder as anyone moving up it would be better off too.

“The Prime Minister has pledged to make intergenerational support a key measure of her Government’s housing agenda and this measure could achieve exactly that.

“This will not solve every cause of the housing crisis but reforming stamp duty could ease its effects by making homes more affordable.”

Stamp duty generated £7.8bn for the exchequer in the year to June and a 2 per cent increase in completions would generate an additional £156m.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Surely all that would happen is that prices would rise to meet the extra tax cost. This does not solve the housing crisis, removing SDLT would be more helpful, but still not solve the problem and highly unlikely to win political support.

    • How so!? The more you sell the house for, the greater the stamp duty to be paid will be. So simply increasing the house price will not cover the additional tax liability

  2. What planet are they on as the seller would have already paid stamp duty on the purchase of the property he/she is selling. Are they therefore proposing a double taxation arrangement? If so, how do they believe the Government will get away with that?

  3. It’s fair to say that those selling properties have the cash to meet the tax (unless they are mortgaged up to their eyeballs).

    This would, however, be another cost for property investors to contend with given that they’ve already got CGT to pay and would therefore face another tax on the disposal – though further deterring property speculation could well align to Government strategies.

  4. There’s at least one obvious contradiction here! Yorkshire says this move would benefit the 200,000 FTBs who paid stamp duty, but also states that new-build houses would be exempt! In my experience, many FTBs buy new build houses, so they wouldn’t benefit at all.
    Apart from this I foresee that the Law of Unintended Consequences will have a field day, and the ‘problem’ this measure is supposed to resolve would be replaced by potentially more serious ones.
    The main issue is that this is a measure that seeks to address the symptoms of the actual problem, which is that a shortage of houses in the right places is keeping house prices too high.

  5. Presumably sellers would not take this into account when deciding the selling price.

  6. What happens when the person buying is keeping their existing property owns another, possibly buy to let, and there is a further 3% to pay on the entire purchase? This is simply another badly thought out idea grabbing headlines.

  7. So what happens if this deters sellers? Deterred sellers could well decide to stay put and build extensions. (As indeed many are now doing).
    Less stock on the market. How does this help FTB? Unless they are buying new – and then presumably the builder pays – again hardly encouraging building houses. Will this affect commercial property? If not then there will be a rush to buy shops etc with a flat above. What about static caravans and houseboats?
    Basically the solution isn’t that difficult. If you can prove you are a FTB – you are exempt from SDLT.

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