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Neal MacKenzie: Time to abolish Stamp Duty and boost housing market

By Neal MacKenzie
March 23, 2012

Neal MacKenzie, managing director of Michael Hardy estate agents, gives his views on the government’s New-Build Scheme

The Government has announced an initiative to help buyers get their feet onto the property ladder.

The NewBuild scheme will enable buyers to borrow up to 95 per cent of the purchase price from certain participating lenders so that they can buy from certain participating builders.

The government says that buyers can borrow up to £500,000 under this scheme, assuming their income can support such borrowing.

Up to 100,000 new homes could be sold as a result.

There is an argument that such policies will help kickstart the property market – up to a point that is true, but it will only affect a very narrow section of it.

If the government were serious about getting the property market going, which they are not, then they have the means at their disposal.

Abolish Stamp Duty up to £250,000; reduce it from three per cent to 1.5 per cent over £250,000, raise the four per cent threshold to £750,000 and the five per cent threshold to £2,000,000 but close the tax loophole that enables the buyers who purchase expensive property through a company to avoid Stamp Duty.

The argument against such a radical change as the one I have suggested is that it would leave a hole in the Inland Revenue’s income.

I don’t accept that notion.

The higher level of activity would more than compensate for the cut in tax.

Even if my suggestion has its flaws then it can’t be beyond the wit of the Treasury to come up with a better way of taxing a property transaction that doesn’t create a threshold that distorts house prices in the way that Stamp Duty does.

And those of us in the South East are particularly hard hit.

The inconvenient truth is that the Coalition wants to kickstart the building industry, not the property market.

They want better levels of employment, not an asset bubble – good luck with that.

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Most recent user comments 9 of 9

"Try as hard as they like Estate Agents really can't raise the price of houses! The market dictates house prices a good agent will be able to read what is happening in the market and acheive the best price that that someone is prepared to pay"

The money saved from not paying stamp duty will be used to increase the size of deposit available. This will inevitably lead to a rise in prices by people using it to buy houses that they otherwise wouldn't be able to afford.

PoneRana, Wokingham
26/03/2012 at 12:54

Brad! (Come On Lads) your comment "The views on here are tired and have been boringly expressed for at least 30 years. yawn, yawn" I can promise you that my view has NEVER been heard before :¬)

Timothy Jefferies
25/03/2012 at 22:29

My first post should have suggested that reducing employers NI contributions should help to reduce unemployment, not increase it as I wrongly typed.

PoneRana, Wokingham
24/03/2012 at 17:21

PoneRana try as hard as they like Estate Agents really can't raise the price of houses! The market dictates house prices a good agent will be able to read what is happening in the market and acheive the best price that that someone is prepared to pay.

Interested From afar
24/03/2012 at 13:16

Stamp duty should be paid by the seller - that would solve the problem.

Just about everything else we buy is inclusive of tax - if the seller had to pay then the first time buyer would benefit.

That way the government gets its revenue and the economy is boosted by first time buyers finding it easier to buy.

Am I the only one who can see the solution without a downside?

I challenge anyone - even The Chancellor of the Exchequer - to explain why this would not work better than the current system!!

The views on here are tired and have been boringly expressed for at least 30 years. yawn, yawn

come on lads
23/03/2012 at 16:55

Can someone explain this NewBuild thing for me? I would have thought that first time buyers faced a difficult task raising a deposit on a pre-owned house let alone a new place.

Ivor Biggun, winnersh
23/03/2012 at 15:45

Should stamp duty exist at all? if I sell my car to someone, I don't pay a tax on that private sale.

Should estate agents exist at all? If I sell my car to someone, I don't pay a third party to advertise it and answer phone calls for me.

Damiano_Tommassi, Wokingham
23/03/2012 at 14:14

If the money were available to remove stamp duty that would be a highly inappropriate use that would rapidly be soaked up by Estate Agents raising the prices of houses. Money like that should be used to reduce employers' NI contributions. This hopefully would increase unemployment and could be focussed on the under 25s, improve the cash flow of small companies, reduce the cost of our exports and improve our competitiveness with imports. The construction industry, being labour intensive would particularly benefit from such a move I do however believe that stamp duty should be progressive. That is the higher percentage rates should be charged within each band rather applied to the whole price once a new band is entered. This would remove the cliff edge effect. The bands could be adjusted to ensure that the revenue raised is unchanged.

PoneRana, Wokingham
23/03/2012 at 13:56

In these challenging periods when even the bovine, stuff-hunger of the masses can no longer be relied upon, it becomes a government's duty to step in with something absolutely sensational such as an utterly irresistible sofa in fawn leather with matching corner group.When you see a sweet-looking sofa like that, you realise that living within your means is completely untenable.