The Chancellor should look again at the nation’s Stamp Duty thresholds, an archaic tax structure which is distorting the housing market, says RICS as part of its 2014 Pre-Budget statement.
The existing ‘slab’ Stamp Duty system taxes a percentage of a home’s purchase price according to which value bracket it happens to fall into.
For instance, a buyer purchasing a property for under £250,000 would pay 1% of the price in tax, while a home sold for just one pound more would generate a tax bill of 3%. This means that many buyers are financially unable to venture above the threshold and vendors may have to price their home below what they may otherwise have sold it for.
RICS believes that the government should consider a fairer, marginal rate to replace the current structure which sees few homes come onto the market at between £250,00 and £275,000 whether or not they are worth that price.
The government should also consider adapting Help to Buy to suit individual regions’ needs. 60% of RICS members surveyed believe that adjusting the scheme on a regional basis would make the market more sustainable. Furthermore, half of those who are in favour believe that the funding should be limited purely to first time buyers. RICS would like to see the government reassess the scheme with a view to providing the relevant help according to an individual region’s needs.
Garden cities could prove a good means of boosting the supply of homes on the market. However, these cities need to be located in places where people are able and willing to live, close to sources of employment and the houses need to be affordable housing. To make the garden cities a reality the government needs to publish its outline prospectus to test the market by giving potential developers, communities and investors clarity and certainty.
While much progress has been made in recent years regarding empty property rates, unoccupied shops and offices that require refurbishment before being re-let are still subject to prohibitive business rate tax. This situation acts as a huge disincentive for landlords to ensure their premises are brought up to quality and environmental standards. RICS would like the government to consider a rate exemption period for these premises which would also result in more work for smaller, local construction firms, while helping the commercial property sector meet its April 2018 target of making buildings more environmentally sustainable.