Sellers to pay stamp duty‚ suggested
Conservative John Stevenson, a solicitor, opened a debate on stamp duty by saying the key issue in housing policy is to get the mix between property ownership, the private rented sector and social housing right. He wants to see a national housing framework with a more flexible local policy.
He said: ‚ Council tax raises £32 billion a year. Business rates raise £30 billion. Capital gains tax raises £9 billion, and a lot of that is on property. Inheritance tax, much of which goes on property, raises £5 billion. We also have VAT on improvements, income tax on rental income and stamp duty land tax, which raises £13 billion. A huge amount of money is raised from property taxes, and in many respects I understand that‚ most Governments quite like property taxes, because it is difficult to hide a property.‚
He cited a survey by the Yorkshire Building Society that found that 71 per cent of young adults say that owning their own house makes them feel grown up, to support his point that ownership makes people feel responsible.
‚ My proposal is simple: change the tax to a sales transaction tax, so that the responsibility for paying stamp duty transfers from the buyer to the seller‚ , he said. ‚ Many of the people who will be selling will have benefited from many years of increasing house prices, so will have sizeable equity in their property and be more capable of dealing with an increase in the price.‚
He stressed it would be tax-neutral; effectively it would make no difference to the amount of tax that the Treasury raises. He continued to promote his idea, saying if somebody wants to move up the chain by selling their smaller house and moving on to a bigger house, because they have a growing family or for other reasons, they would benefit quite significantly from the change. He believes that prices will not go up because the market will adjust ‚ naturally‚ . There are some practical issues about identifying who is a first-time buyer, he admitted. He would let the buyer‚ s solicitors continue to be responsible for paying the tax and within the legal profession there would be a mechanism whereby, when the property was sold, they would ensure that they had sufficient money to cover that tax when the property was registered.
Stevenson made a second point that when someone submits an SDLT form, the national insurance number of the buyer goes on the form. He suggested a change whereby the seller‚ s NI number also goes on the form. That would give HMRC an opportunity to check two things: capital gains tax and payment of income tax, he said. That is particularly relevant to people who have second, third or fourth properties and is not related to the principal private residence. He believes that there may be some uncollected tax, because it is possible for people to avoid paying income tax on a rental property, or capital gains tax.
Conservative Dr Dan Poulter said that with so many people in the private rented sector‚ 20 per cent of the housing market‚ saving for a deposit is a major issue for many working families, who are currently paying rent, or indeed a mortgage, and want to upsize their property. But fellow Tory Kevin Hollinrake, a former estate agent, said it would be a disincentive for people to put their houses on the market if ‚ we effectively charge them to sell those houses‚ .
Exchequer Secretary to the Treasury Robert Jenrick, a former solicitor, said the Treasury has given thought to the suggestion on seller‚ s stamp duty and has ‚ done considerable research into it‚ . Evidence suggests that the cost of stamp duty is reflected in the value of the property, so switching the formal liability to the seller would be likely to have a limited effect on the overall cost of purchasing a house, he said. The vast majority‚ 80 per cent‚ of first-time buyers have no stamp duty and 95 per cent benefit from government changes, he added.
On the suggestion on how to tackle uncollected tax, Jenrick said he was keen to meet with the MP and said HMRC would be interested in considering the idea.
He closed the debate by saying: ‚ One argument is that we now need to move into a period of stability with respect to stamp duty, so that those selling and buying homes and those operating in the market have the confidence to make choices in the future.‚
The full debate can be read here.