Speaking to MPs on the House of Commons Treasury Select Committee this week, Richard Donnell, executive director at Zoopla, said the cost of moving is a key barrier for homebuyers.
Donnell said Stamp Duty is hampering labour mobility and economic growth. The impact is most pronounced in southern England where home values are higher. 70% of the tax is paid on sales over £500,000, Zoopla data shows.
The 5% band starting at £250,000 is increasingly hitting buyers of average priced homes in places like Aldershot and Southend where stamp duty costs are £7,500-£10,000, according to the portal.
While many people are calling for Stamp Duty to be abolished, Donnell warned the challenge is that the tax raises £11bn, a year making it a very tough decision to abolish outright.
Zoopla said: “In reality, the abolition of Stamp Duty will need to be run alongside wider reforms to council tax to make the system fairer and get the benefit of lower moving costs for more home buyers.”
Donnell added that a mansion tax, rumoured to be under consideration in the Budget, is a “non-starter” as less than 1% of homes are valued over £2m and the tax raised would be small and heavily contested as expensive homes are hard to value, and the tax base would be small.
Donnell added: “Our consumer data shows there is a strong appetite to move home but the affordability of housing, including the cost of buying, is a key barrier for many households, especially in southern England. Reducing the cost of stamp duty to support more home moves and increased labour mobility would be very welcome in the short term but costly at the same time.
“Property is not the place to look for quick wins on taxation, but there is a strong case for longer term reforms that see the removal of stamp duty and the introduction of a proportional property tax that replaces council tax and eases the barriers to home moves.
“While it’s easy to model reforms to property tax reform on paper selling it to home owners and executing any change will be a far greater challenge and needs to be approached with care.”
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Source: Estate Agent Today
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