I consider the biggest hinderance to the housing market is the middle band of stamp duty between £250 and £925k.
Using myself as an example, I am lucky enough to have a nice 4 Bed house in a nice area in Cheshire. It is a good Neighbourhood with good schools, close motorways, train stations and airports. Ideal when you have a young family.
The approx. value of this house is £550 to £600k
Now, I have considered moving to a different part of the country, perhaps downsizing in terms of size but have a bigger garden, larger garage etc
However, if I looked at a £600k house, it would cost me £20,000
And if I chose to move further south closer to my grown-up family, where house prices are more expensive, the stamp duty increases significantly.
So, I and many of my generation, who moved to an area of good schools 20 years ago, have now become a blocker to younger families who want to live in the area and are unable to do so as there are not enough houses on the market.
The consequence are: –
- that there are less children in the local schools residing in the local village. (I say village but with 7500 residents). More children must travel. The consequence of which are children do not walking to school (health benefits) and more traffic.
- there is a shortage of houses in areas they are needed
- there is less tax revenue as less people moving.
- less stimulus in the housing market and associated trades
- the tax man gets no money out of me as I do not move.
It can be seen from the statistics that the revenue on Stamp Duty has fallen from £11.7Bn in 2022/23 to £8.57Bn in 2023/24 and the number of house moves have fallen from 1.06 million to 0.872million over the same period. So we can see, the trend is down causing more of a shortage in the housing market.
So. what would I do if it was up 2 me, I have 2 ideas.
Option 1 – Changes to Stamp Duty Rates
Any House between £150k and £1million would be subject to a 2.0 % levy. If the market stayed the same as 2023/44, this would reduce the tax take by 2.5Bn.
However, I consider this will stimulate the market and increase the number of transactions. If this only increase to 2021 / 22 levels, there will be an increase the number of transactions by 39% in the under £1m price bracket.(yes that is the amount it has fallen in 2 years , number of transactions have fallen to 845,000 from 1,175,000)
So, on the basis of this will stimulate the housing market in third and fourth time buyers sector, and the levels only reach 2021/22 levels, the tax take would be £3.552Bn, a shortfall of £1.167 Bn.
In addition to the above, house prices have increased by 6% over the last 2 years so the revenue will increase by £0.2Bn for houses under £1m and by 0.23Bn for those over £1m
This gives a total receipt of £4.0 Bn
So, in theory, I am costing the country £ 0.7Bn. How am I going to pay for this.
The government has promised 1.5 million new homes over 5 years which equates to 300,000 per year which would cover the 0.7Bn shortfall.
So the above, in my opinion would be revenue neutral as it would stimulate the housing market sufficiently to offset the lowering of taxes.
Option 2 – Pay on the difference
This is the option I would prefer, and I think it is the fairest.
The basis is that you only pay a %age on the difference in house value, so that you only pay on the increase.
If you sell your house for £400k and buy for £550k, you pay on the difference of £150k. I do not have any data on the difference, so I have just made an assessment.
So based upon 1.2m transactions, that would generate at 5%, £9.3 Billion, more that recovered in 2023/24.
The additional benefits of stimulating the housing market will be felt across all the building trades, from plumbing, extensions, patios, conservatories DIY etc as more and more people will want to improve their new homes. This will create more jobs and greater tax revenue.
If it was up 2 me 
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