Senior figures in the property industry are continuing to voice strong opinions on the government’s proposed overhaul of the housing tax system – including the potential introduction of a new levy to replace stamp duty and council tax.
While many acknowledge the need for reform, there is a growing call for the Treasury to seize this opportunity to get it right. Industry leaders warn that any new system must be fair, effective, and fit for purpose – not simply a punitive tool to raise revenue.
They caution that poorly designed tax changes risk punishing homeowners and undermining confidence in the housing market. Instead, the focus should be on creating a tax structure that supports long-term housing goals and works for everyone – not just the Exchequer.
Dominic Agace, chief executive of Winkworth, said: “Stamp duty reform is welcome. It is dead money in a transaction and it limits moving home, exacerbated in the SE of England by the Osborne reforms in 2014. It makes sense to change it to a tax paid for by a seller as this will help move it to those realising gains, which on the face of it makes sense and could see an increase in property transactions and spur prices on.
“However, the worry is in the current market it could just become a cash grab taking more money out of the housing transaction, therefore still limiting people’s ability to move home and preventing downsizers moving through fear of triggering the taxable gain.”
Agace says he wants to see a reduction in the tax taken out of the transaction by the government, to encourage downsizers and greater social mobility.
“The increased tax receipts for the government from increased volumes have now been proven by various recent stamp duty changes and holidays and the surge of activity they have created, most recently this April,” he added.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Is this just council tax in another name? In any event the council tax system needs revising because there are so many anomalies but the cost of doing so and the time involved would be prohibitive.
“There are lots of issues with regard to values and type of property in the present system – for example, some residents may pay relatively less than others even though their properties are now much more valuable because council tax was set at a time before gentrification or other improvements.
“But it is all about the optics – it is not just about introducing another tax, a separate tax would have to be consulted on, would take time to badge and produce – so the easiest way to increase revenue would be to raise council tax. But it all depends on by how much needs to be raised and whether more structural changes take place.”
Leaf says he is very much in favour of incorporating this tax as a substitute for stamp duty as the latter is a tax on moving.
He explained: “We are trying to encourage growth; as a country, we want to see improved job and social mobility. Stamp duty stops that, particularly among those on the margins, such as first-time buyers, as it is such a big investment.
“We can see the advantage in taking tax from people who have benefited from an increase in property values but the fear is that it is going to impact the vulnerable in particular. Those of retirement age, say in their late sixties, might be able to move into a flat or bungalow (should they be able to find a suitable one) with not too much of an issue. But for those more on the margins, say in their early eighties, who are not so mobile and don’t want to move out of an area where they have lived comfortably for many years near family and friends – why should they have to move some distance where property prices happen to be cheaper?”
“We understand the issue of right sizing and getting people in the right properties as far as possible but forcing people to downsize, particularly the most vulnerable and compromised, must be avoided.”
Propertymark has highlighted that any future changes to the current Stamp Duty system across England and Northern Ireland must be carefully considered, fit for future purpose, and encourage the concept of homeownership for those who aspire to it.
It says that proposals for a ‘proportional’ property tax regime must be wisely measured in alliance with key industry stakeholders and deliver a dynamic approach in terms of supporting the property ownership journey.
Any revised system must assist first-time buyers, second steppers and those looking to right size, according to Timothy Douglas, head of policy and campaigns at Propertymark.
He commented: “Discussions around reforming stamp duty are welcome because it is a significant barrier to moving and getting people on the housing ladder. What’s key is that any reforms are evidence based and support first time buyers, second steppers and those looking to right size.
“Economic growth can come from reducing the financial burden of Stamp Duty which we know increases the number of transactions, but any changes must work alongside differing property prices and the dynamic nature of our housing markets across the country.”
Reeves urged not to turn new property tax into a homeowner ‘money grab’
Read the orginal article: https://propertyindustryeye.com/get-property-tax-reform-right-industry-urges-government/
