"The move to cut stamp duty in 2022 was perhaps the only sound policy idea to emerge from Liz Truss and Kwasi Kwarteng’s disastrous tenures overseeing the UK economy, providing significant financial relief to home buyers, especially first-time buyers"
- Simon Gerrard - Martyn Gerrard
To have a healthy, competitive housing market, you also need to have an affordable one. Yet in over a decade, all the government has to show for itself is watered-down aspirations, which are all bark and no bite. I am feeling increasingly disillusioned by the lack of initiatives to tackle the housing crisis from both the current government and those proposed by the opposition in the run-up to the General Election.
We are in desperate need of decisive leadership and strong policies to resurrect a neglected market, and one place that both parties could make a sensible start is to reform stamp duty.
Reverse stamp duty
Currently, the housing market is simply not functioning for the vast majority of people, and one key issue preventing people from getting on to, moving up, or scaling down the property ladder is stamp duty.
I have repeatedly urged the government, to no avail, to consider policies to get the country to a place where the housing market is responsive to people’s needs. I appreciate that the income from Stamp duty is vital to the treasury, so reversing the stamp duty burden would be a good first step.
In its current form, stamp duty is unfairly punitive and a tax on aspiration. By putting the financial burden on the buyer, it discourages or completely prevents families from moving into larger houses and makes it nearly impossible for first-time buyers to get a foot on the ladder.
To square this circle, I strongly believe that the stamp duty should be reversed so that the seller pays the tax. This would drastically increase the affordability of moving home for a huge number of people.
Moreover, reversing stamp duty so that it is paid by the seller naturally encourages people to act on their homeownership aspirations, rather than taxing them on their hopes of owning a suitable home for each stage of life. I have met with countless families stuck in homes which are unsuited to their needs because the stamp duty attached to moving into a family home is so high, resulting in a totally stagnant market.
Supporting downsizers
Of course, at the other end of the market, you have older people who have climbed the property ladder alongside a growing family. With their children having now flown the nest, they find themselves living in unsuitably large homes.
For them, reversing stamp duty will seem an unattractive prospect. Paying more money to sell a larger home to downsize into a smaller, more suitable home for the later stages in life is unlikely to appeal to anyone.
With the endorsement of Lord Heseltine and Lord Mandelson, The Family Building Society recently proposed scrapping stamp duty altogether for older homeowners looking to downsize - a proposition that I strongly agree with and would see as an ideal supplemental policy to reversing stamp duty.
Downsizing is something the government should be actively seeking to incentivise, as it is an essential means of freeing up family homes needed by the next generation of homeowners, thereby keeping the cycle of homeownership turning.
The government seems happy to trial ideas with regards to reforming stamp duty but consistently lacks the leadership, ambition, or simply the concern about the housing crisis to actually see them through, at the expense of UK homeowners.
For example, the move to cut stamp duty in 2022 was perhaps the only sound policy idea to emerge from Liz Truss and Kwasi Kwarteng’s disastrous tenures overseeing the UK economy, providing significant financial relief to home buyers, especially first-time buyers.
Yet, ludicrously, this is set to be undone in 2025. Transforming the housing market is feasible, but across the political spectrum, parties are blocked by their own lack of long-term vision or interest in actually helping people buy homes.
The stamp duty issue is only a small piece of the wider housing crisis puzzle that the government is totally failing to put together, and tax reform must come as part of a larger pivot to a planning system that encourages the development of new homes and supports a marketplace with an abundance of options for people needing a home.
Nonetheless, reversing stamp duty and scrapping it entirely for those past the retirement age who are now looking to downsize would be at least a first step towards a place where home ownership feels possible, and people are not blocked from acquiring the homes that they need.
