Taxing house sales

SIR – When my wife and I married in 1980, the rates assessment on our house in Paddington was equal to 1 per cent of its value. Today, the council tax on our house in Surrey is equal to just 0.1 per cent of its value. On the other hand, if and when we downsize, the stamp duty will be 10 per cent of the sale price, whereas on our first home it was just 1 per cent.

While stamp duty is creating a logjam in the housing market, council tax has distorted market prices. In Houston, where our son lives, property taxes are levied at higher levels, meaning that the cost of a modern flat in America’s fourthlargest city is no more expensive than in Nottingham or Plymouth. Rates are higher but mortgage costs and debt levels are relatively lower than they are here.

The Government should cut stamp duty in half. Each property, after its next sale, should subsequently face a new annual tax, equivalent to five per cent of the stamp duty forgone. This would spur house sales without causing a boom in prices. The revenue generated would soon exceed the cost of the stamp duty reduction.

With the new tax being based on sales prices, no valuation officers would be needed in the majority of cases. As it would fall only on new owners, they could budget for it in their purchase decision. Nick St Aubyn

Dunsfold, Surrey