What if Stamp Duty was abolished?

With respect, your plan for a wealth tax sounds bonkers. It would be almost impossible to implement with that level of complexity and probably cost more to run than it generated in tax.

Wealth taxes do not create the revenue people think they do because they disincentivise investment behaviours, harm innovation and impact long-term growth.

I wish people on MN would devote half as much time to coming up with ideas for growing our economy as they do inventing ever more ridiculous ways to increase tax.

I think one issue is that it blocks a lot of medium-term moves that would make sense, but not with that tax added. Especially in London because the values there are much higher so the tax is too.

Using us as an example — we have two spare bedrooms that we thought would need but don’t. And when we bought we didn’t know where school would be. So we are now in the wrong place with too much housing.

It would be ideal to move next to school for eight years or so, then move again when we don’t need the location. But the SDLT on each move would be £100k+, or £300k if we count both moves, assuming continued fiscal drag. That’s about £40k/yr, or £200+ per school day. It’s just not worth it.

It’s not the worst injustice, obviously. But the govt gets no stamp duty in either scenario because we don’t in fact move. We get a longer commute, and a larger family or young sharers who needs the space don’t get it.

Happy to pay the same amount in tax overall — but paying to make our housing system even less efficient and to further restrict supply grates.

And

Your figure of £100 is way off ( where did you get that ? )

This from HMRC figures and Hamptons

Larger houses have less occupancy and services provided / m2 compared to smaller ones

As such providing the services for those in larger properties is less expensive

The logical step from your thought process then would be to increase council tax for smaller properties.

You can blame the government(s) for that.

Every single government I can remember has talked a good game on housing but failed to deliver.

Rayner is last in a long line of this.

This of course is how parties like Reform get elected. Government(s) failing to cater to a basic need of the population.

And if they aren't catering to basic needs of the population, what is the actual point of any of them.

Haven’t rtft but perhaps stamp duty could be reduced for over 60s?

The housing market has ground to a standstill so people are coming up with desperate stuff like this to try and get it moving

Well no so desperate they are going to build any houses.

The housing market has ground to a standstill so people are coming up with desperate stuff like this to try and get it moving.

House prices need to fall to sensible levels with or without stamp duty, then they will become more affordable and the market will pick up. Hopefully that point will start shortly.

At the moment there is just a stand off between sellers refusing to drop prices and buyers unable to pay.

This situation will not last forever.

YANBU. Stamp duty was supposed to be temporary in the 1800s or something. We can’t move partly because of it.

I don't understand how stamp duty can stop people downsizing. I am in the south east with much higher prices than most of Scotland. I could downsize from my 3 bed £600k house to a 2 bed £350k flat and would still have over £200k left after paying stamp duty.

It's insane that all the tax on ownership is paid at the moment you buy somewhere. It's also insane that we paid twice as much SDLT as a neighbour who bought 10 years before, and less than a fifth of what neighbours who moved recently paid. Seriously, it's mad.

But it's also hard to see how to undo it.

For us, well, we paid our chunk two decades ago, and although it felt LOADS then, I wouldn't resent paying properly now. But for my neighbours, who just paid up, I can't imagine how furious they'd be if they found they had to pay a land tax AS WELL as the SDLT they've already forked out for.

As others say, why not a system where

a) the ratable value is set based on property valuation (done in past 10 years/most recent sale)
b) the rate is set at a regional level

I do wonder whether there would be a substantial (negative) effect on renters tho... I guess this would have to be a tax that applied to the owner of the property, not the occupier (cf council tax) - and yes I know costs get passed on, but that's the case w SDLT too. It would also potentially cause problems for people who have over-extended themselves and whos circumstances have changed, but mortgage companies ought to take the additional costs into account when thinking about affordability, and the original price ought to be lower...

But that doesn't happen. People buy bigger houses when they need them (ie when they have children) and although they have to pay SDLT, the benefit of having a sufficiently large house for all your kids to have a bedroom (if you can afford it) is sufficient that they do it anyway. The converse is not true though - downsizing is much more discretionary so the SDLT is a significant barrier to people making that move.

100%. Moving is (nearly always) a choice. Can't pay the stamp duty, don't move then. But no choice but to pay council tax.
The only change I would make would be to add the stamp duty to the sellers costs rather than the buyers, more like a capital gains tax. If someone is downsizing they will have the money to pay it, and if someone is upsizing they will pay it on the sale of their property. But this enables more first time buyers to get on the housing ladder and reduces pressure on rentals.

Being of the generation that is supposed to be holding onto over large houses because of stamp duty - that’s a complete load of bollocks.

people stay in their forever family home ( in my case a 3 bed north facing estate semi which no one in MN actually every wants anyway ) because it’s just that - my home

so what that the second bedroom is only used when family visit , I am used to this home and still love it
And the area , my friends and neighbours

what I am seeing is people my generation upsizing when inheritances come through - again not bothered by stamp duty. I think they are mad but there you go. Just because they are older doesn’t mean they don’t desire things. And people selling very large multigenerational homes when the older generation dies. Again stamp duty isn’t a factor in that choice. And mostly just living in the home they love and have memories in

just wait for us all to die

what stops people moving is the high house price but
when stamp duty was tweaked in Covid it just led to higher house prices and as a nation we need house values to fall relative to income to make both buying and renting affordable

That’s not what the data shows, from countries that have had SDLT holidays. Base prices rise but by less than the tax cut, so total prices fall a little.

Also, there’s benefit just from having people living in the properties that best suit their needs, even if total price stayed the same (which evidence suggests it doesn’t).

If you don’t want the money raised via council tax then fine — this isn’t a thread on what a great tax council tax is. It’s about what a bad tax SDLT is. I’d put it into a land value tax myself, which would be more progressive and less distortionary.

Property is an unusual market:

i) people often need a large property when they are young with family, but not later,
ii) people need to be close to jobs while they are working, but not later,
iii) people often can’t afford property when they need it most (when young).

So a large SDLT isn’t discouraging a lot of very wealthy young couples from over-buying property when they don’t need the space and don’t need the location, because the number of people in that situation is very small. The number of people who have families and jobs, but later retire, though, is huge. That’s who this tax is cementing in place.

Hmmm I’m not sure. Those of us lucky enough to have houses to downsize from probably made a lot of money from rising prices. Prob more than covers the stamp duty.

people who want to downsize can - they can buy a cheaper property so absorb the cost of stamp duty. Plenty do that. I can see why people don’t want to but it is a choice.

If they abolishes stamp duty, house prices would jump by exactly the same amount and then some the next day. Effecting anyone trying to upsize so they can have children for e.g., and any young people buying their first home.

Meanwhile cranking up council tax would drive people out of their homes- probably hitting people who are already struggling hardest. People think this would be the elderly, but if actually imagine it would be working families with small children already struggling to cover childcare, bills etc.

But, yes, let's change the entire tax system to suit you and your circumstances OP.

And you'll be happy to step over the bodies on the way to the opera.

Or, it discourages them from buying large/multiple properties in the first place.

Why should those who bought their forever house have to fund you moving house constantly?