Hammond urged: Cut stamp duty to lift house price slump

CHANCELLOR Philip Hammond was under pressure last night to slash stamp duty to stimulate the slowing housing market.

It comes amid fresh evidence that his predecessor George Osborne’s stamp duty increase for more expensive homes is dragging down prices at the upper end of the market.

Almost 68 per cent of chartered surveyors reported that owners of homes worth more than £1million are having to sell them for less than the asking price.

A report today by the Royal Institution of Chartered Surveyors said the tax changes, record low numbers of homes for sale and political uncertainty are all ‘hindering the housing market’.

A third of respondents reported that agreed prices were up to 5 per cent below the asking price, according to Rics. More than a quarter said sale prices were between 5 and 10 per cent below the asking price.

There are growing concerns that stamp duty is deterring pensioners from downsizing and that this contributes to a shortage of large homes for young families.

The former chancellor’s reforms have hit properties worth £925,000 or more with spiralling stamp duty bills. The overhaul was designed to target the wealthy and has cut stamp duty for most properties. But it has also hammered pensioners on modest incomes who bought their homes decades ago.

Academics believe this has made pensioners in large homes unwilling to move to smaller properties because of the prospect of paying £143,000 on a £2million home, for example. This has helped push the stock of homes for sale on estate agents’ books to close to a record low, according to Rics.

A separate analysis by the HomeOwners Alliance yesterday found that across England and Wales, homes originally in the £1.75million to £2million bracket are being discounted by an average of £225,775 to secure a sale.

A report from the London School of Economics also concluded that the stamp duty rise has put the brakes on the housing market.

Former chancellor Lord Lawson is among those calling for stamp duty to be cut, and the Institute of Economic Affairs think-tank has called for it to be abolished, describing it as a ‘tax on moving home’.

Jacob Rees-Mogg, a Tory backbencher, said last night: ‘It is perfectly obvious that high levels of stamp duty create illiquidity in the housing market and that has damaging knock-on economic effects.

‘ Lower taxes strengthen the economy and lead to more government revenue.’

John O’Connell, of the TaxPayers’ Alliance, said: ‘This pernicious tax prevents younger people from getting on the housing ladder and stops older people downsizing to more manageable homes.’

The Treasury said: ‘We reformed property taxes including stamp duty to help more people get on to the property ladder. In addition, we are helping people… buy their first homes through policies such as Help to Buy and the Lifetime ISA.’

‘It is a tax on moving home’