What if Stamp Duty was abolished?

Move to somewhere cheaper that isn't affected by stamp duty.

meh. I think you hate stamp duty because it's impacting on your choices. Most people are not impacted at all.

They definitely should review the thresholds - but if they did that then they'd also have to review the rates to avoid losing revenue.

A tax on the value of the house is not workable - how would the government get current values that everyone agreed with and how on earth would pensioners with large houses afford the 5% you're suggesting??

Is it really that they can't afford to downsize? I imagine in most cases a smaller house frees up some cash which can then be used to pay stamp duty with some left over?
I can see that the huge stamp duty cost is a mental barrier though.

Or is it that they want a bungalow but there's a shortage so they cost more? So swapping e.g. a 4 bed house for a 3 bed bungalow doesn't actually free any cash?

And agree it's an illogical tax in general. It penalises moving which is already stressful and expensive. Stay in one place and you pay very little.

But raising council tax wouldn’t work. Comparing CT with stamp duty is like comparing apples and oranges.

The whole council tax system is ridiculous. I live in Birmingham which has one of the highest rates in the country as it’s one of the biggest councils. I won’t get into what a shambles they’ve made of the finances 😡

I pay considerably more per annum for my tax band than most London boroughs. Band A in BHam - £1,491
Band A - London - £849!!!!

They should bloody sort that out first!!

I do agree that the whole system needs a radical overhaul. Council tax, stamp duty and inheritance tax are all deeply flawed

@mondaytosunday

Perhaps go back to council tax. Increase the amount if bands and update the valuations and do that more regularly.

Probably the best way to increase council tax revenue. We don't have enough bands at the top end. We could do with several more high end bands, so that the billionaire with a £10m mansion isn't paying the same council tax as the pensioner with a £750k detached 4 bed home!

And yes, update council tax bands more regularly, at least every 10 years, and maybe even every 5 years. Do the job properly to catch people who've improved their homes with extensions, conversions, etc as they are often in the same council tax band as when they bought a decade or two earlier when the house was smaller and worth a lot less.

That's not really accurate, or indeed even the whole picture is it? Many people moan that there is a tendancy in later life to 'under occupy' houses. Now in part that's because people can affod to, but it is part due to the crazy stamp duty situation where somone wanting to down size ends up paying tens of thousands in stamp duty to do so. So they do't bother.

Likewise, there's a tendency to skip steps in the housing 'laddder' just because the transaction costs are so high. Which means that people tend to buy when they are older, and so they stay in rented longer. Gone are the days of a few years in rented, then a gradual move up the ladder. Stamp duty makes that an expensive game - over a decade or two you coulf be paying a six figure sum in stamp duty alone.

How about of stamp duty only on the incremental cost? Then if you trade down, nothing - freeing up larger houses. If you trade up from £300k to £500k you pay on the £200k...? The reduction in tax income from this is probably going to be offset by a larger number of transactions. Just an idea :)

Yes I think the stamp duty does prevent many moves. Someone buying my house - a normal three bed terrace - would pay almost £70k in stamp duty as I’m in London. A friend said it made more financial sense for him to pay £75k in rent a year than buy until he was sure he’d be buying for the long term. However the stamp duty holidays experienced in the past has only led to higher prices. An Australian study looking at longer than the recent holidays in the UK system found it led to increase I prices in every case.
But stamp duty does make money and simply increasing council tax won’t make enough of a difference, as it is it is an unequal tax anyway.
Land value tax has been suggested, so people would pay .5-1% of their property value in an annual tax (similar to some places in the US). But then those that live in high price areas - or whose house has gone up vastly over the years - will be penalised. That older couple who bought their modest house which decades later is worth £1m - do they have the funds to pay £10,000 every year? I certainly don’t have the £12,500 fir my house as I may be asset rich but cash poor.
Perhaps go back to council tax. Increase the amount if bands and update the valuations and do that more regularly.
Tgere have been many suggestions and many studies to try and make the system fairer and still give the government its money. But it will take a brave leader to implement any major change that requires people to pay more.

You then have everyone in certain areas (eg London) paying significantly more than people in other areas. Unless you mean like council tax where it was all done relatively at a local level?

I certainly think there should be exemptions for older people downsizing or moving to more suitable accommodation.

Bungalows are quite expensive, comparable to size (well they are round here anyway), in theory because they are land hungry, but they tend to have small gardens round here so possibly more it’s supply/demand. Add in moving costs and stamp duty it makes it very hard for people to move somewhere more suited to their needs, which would also free up family sized houses,

I think the government are missing a huge opportunity. There are so many elderly people in houses too big for them which could be full of families however the elderly often can't afford the stamp duty to downsize.

So you want to raise council tax for EVERYONE so that those that have large, expensive houses can move more cheaply.

What about people who “flip” houses, be great news for them, would increase their profit almost exponentially.

Don't get me wrong, abolishing stamp duty would make moving affordable to me, actually raising council tax would probably make moving a necessity. It’s already our single biggest bill after our mortgage payment.

How much untaxed capital gain have they made over the years they've owned those houses? Perhaps the answer to scrapping stamp duty is scrapping or reducing the main residence relief for CGT? That way, there'd be some CGT when you sell the house rather than stamp duty when you buy it.

Scrapping stamp duty would ruin this country. We wouldn't be able to replace the revenues and this tax is about the only thing regulating the housing market. Really stupid idea.

I agree, it’s a very stupid tax that actually increases house prices and clogs up the market because it makes the market illiquid and reduces supply. People can’t just slowly work their way up the ladder but have to go for the biggest house possible and stay there for 10 years +. It disincentivises downsizing, keeping elderly couples in 5 bedroom homes that families need. I think stamp duty should be replaced with a capital gains tax on main residences (currently exempt from capital gains) - which would mean that the people who have actually made a massive 150% profit on their homes would pay the tax and not the first time buyers. People would also be more willing to buy flats etc as if they didn’t increase in value then you’ve at least avoided capital gains tax.

I would support it being removed as part of a package of reforms that introduce a regular wealth tax and close the loopholes that make inheritance tax so inefficient at getting tax from the wealthiest estates (only 4% of estates pay inheritance tax and it's not the wealthiest 4%, who all evade it - it should be at least 25% of estates that pay something, with the wealthiest all included with no get-out clauses).

It doesn't make sense for there to be a penalty for moving when people who are way wealthier never have to pay because they would never leave the house that has been in the family for generations.

Wealth taxes would level the playing field. I'd favour a graduated rate - 2% on wealth exceeding £10m, 1% on wealth exceeding £5m, 0.5% on wealth exceeding £1m, 0.25% on wealth exceeding £500k and 0.1% on wealth exceeding £100k. It should be a normal cost of property ownership, regardless of how frequently you move, and including everyone at an appropriate level.

Yes it's also disproportionately affecting the elderly in my family. We know more than a handful of the generation above us who have mobility and cleaning issues but just can't afford to downsize.

It is deterring people from moving though. If they reduced it to a more sensible rate, tax take might increase! It happened when Osborne lowered Corporation Tax rates.

People have been saying for years that it's a massive break on the housing market and that certainly seems to be our experience.

We inherited MILs house 2 years ago. It's a modern house, in a little village in Cornwall lovely inside with a sheltered quiet garden. Perfect for people who want to downsize and relocate to the countryside. We had several viewings during the stamp duty holiday, but as soon as that ended we have had maybe one or two. Our EA say all enquiries for that sort of property have virtually stopped, partly due to the school holidays, but interest dropped before that.

They should abolish it or at least reduce it. The extra cost it adds to a house move is off the scale, and I think it is stopping people moving unless they have to.

Yes, and again if you move again etc etc. Which is exactly OP's point. people are incentivised NOT to move, in order to limit paying SDLT.