DUTY FREE?
It could be worth holding off buying that home yet. The next prime minister will be under pressure to axe stamp duty on the majority of houses, says HARRIET LINE
THE next prime minister has been urged to abolish stamp duty on all but the most expensive 10th of houses by taxing foreign-owned, empty and second homes.
Centre-right think tank Onward has called on Boris Johnson or Jeremy Hunt to set out proposals to take homes costing up to £500,000 out of stamp duty land tax.
A report, co-authored by Tory MP Chris Philp, said the measure would remove stamp duty from 770,000 primary house purchases a year. It also suggests halving stamp duty on all primary residences above £500,000.
Onward estimated the tax cut would cost £3.3 billion a year, and suggested the reforms be paid for with surcharges on other types of property.
It recommended a 1% annual tax on the value of homes left empty for more than six
months in a year, which it said would raise £645 million a year.
The think tank suggested increasing the stamp duty surcharge on second homes and investment properties from 3% to 5% to raise £790 million per annum.
Onward also suggested a 3% stamp duty surcharge on non-UK resident buyers of residential property to bring in £540 million a year.
Among other measures to pay for the tax cut, the think tank suggested a higher band of council tax for more expensive properties and ending council tax reliefs for vacant and second home properties.
Mr Philp said: “It is essential that the next prime minister takes early action to back homeownership and tear down the biggest
barrier to hardworking people getting on the property ladder by radically cutting stamp duty.
“These stamp duty cuts are designed to kick-start the home ownership dream – just as Thatcher did in the 1980s. Eighty-six percent of the public want to own their own home, yet only 63% do. They will help first-time buyers, down-sizers, up-sizers and people needing to move for work.
“These reforms will get the whole housing market moving – and help make sure we are making the best use of housing stock by making it easier for older people in large houses to move, allowing growing families to move in.”
Will Tanner, director of Onward, said: “Stamp duty is a bad tax. It creates friction in the housing market, preventing people from buying their first home, moving for work or downsizing to free up housing stock for families.
“The next prime minister should be bold: take all but the most expensive properties out of stamp duty and pay for it with fairer taxes on empty, foreign or expensive properties. If they don’t, the Conservative dream of a property-owning democracy will get further and further away.”