Neal MacKenzie: Time to abolish Stamp Duty and boost housing marketBy 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.