Yorkshire Building Society (YBS) has reignited the stamp duty debate by urging the government to reform the property tax so that it is paid for by the seller rather than the buyers, writes property developer Richard Carr.
The building society believes that changing the way stamp duty is paid will help first time buyers get on the property ladder and those at the bottom move up it.
YBS estimated that changing the way the property tax is paid upon completion would save first time buyers in England, Wales and Ireland an average of £3,791, whilst Londoners would save an impressive £13,171.
The building society’s findings and recommendations have been submitted formally to the government ahead of the Chancellor’s Autumn Statement, which is due in November.
With first time buyers being able to enter the property market sooner, YBS believes the reforms would add an additionally 16,000 sales in the first year, with first time buyers accounting for 6,000 of them.
Between June 2015 and June 2016, almost a ¼ million first time buyers paid stamp duty having purchased a property above the £125,000 minimum threshold, which represented 75% of all first time buyers.
“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. This would be felt most of all in London where on average our members pay a staggering £13,171 in stamp duty for a first home,” Andrew McPhillips, chief economist at the Yorkshire Building Society, told propertywire.com.
“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,” he added.
In the 12 months between June 2015 and 2016, stamp duty generated close to £8 billion and YBS believes by going ahead with the reforms it would create an extra £156m in revenue.
Although Richard Carr wants to see more people get on the property ladder, he doesn’t believe the reforms will work. If the property owners and developers are responsible for footing the stamp duty tax they will simple increasing the original price to reflect that, which means that first time buyers are still paying more.
Richard thinks Stamp Duty tax should return to its 2006 level.