What if Stamp Duty was abolished?

[Dingledongledell]

I work in an industry that hears lots about tax policy. Stamp Duty is widely regarded to be the UKs most stupid tax. It stops people loving house when their house no longer meets their needs and prevents them from moving areas to take new jobs. It is incredibly economically damaging.

I have a big house as we bought it to accommodate multigenerational living. My MIL is now in a care home and I’d love to downsize. I’d love to live mortgage free, but if we downsized to a property £150k cheaper than our current house any savings would be largely eaten up by stamp duty.

I feel trapped in a big house with a big mortgage. We paid a vast amount of stamp duty to move here not too long ago. We are surrounded by neighbours who have lived in their large houses for many many years. Why should I pay hundreds of thousands in stamp duty over the years just because we move house, when others can sit in vast houses paying nothing more than council tax? It makes no sense to me.

What changes would you make to your current living if stamp duty was abolished?

I appreciate that living in Scotland where stamp duty is far, far higher than in England just exacerbates this problem.

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

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.

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.

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

This from HMRC figures and Hamptons

And

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.

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.

Agree
They do not raise the money people think they will and result in net tax payers leaving
All very Short sighted

more a ‘if it doesn’t affect me I don’t care tax’

This would be very unfair for elderly people who bought years ago and have sat in their house for decades while the market shot up around them. I’ve a friend whose parents bought a house in Notting Hill in the 1970s, because the area was a dive and it was cheap. Their home is worth millions now. Where are they expected to find the money to pay a “wealth tax” ?

Yes let’s make the boomers even richer due to property, while still penalising younger people who haven’t made a killing on property price inflation.

I really wish they would do something with it.

I’d like to move at some point as our house is a bit small, but the stamp duty is going to be six figures - which is putting us off. We can’t move more than once really due to this.

And - I’m a millennial so have bought when prices were already high. To earn enough to pay that stamp duty, I need to earn twice as much again.

I wouldn't support only dropping the stamp duty for the over 60's downsizing. They will have made gains on the house over the years, so why should they pay less than a first time buyer or growing family?

I also don't see it leading to a massive downsizing by the empty nesters. People like having their big kitchen, living room and garden, with room for the whole family at Christmas. There would also be all the other moving costs to pay, so they would still perceive the great loss that is currently blamed solely on the stamp duty.

On a £500k home isnt it £15k?
Yep its a consideration but taxes are taxes.
Me and Dh have been net contributors so far in life. Our council tax on a modest sized 4 bed house is £3k plus a year.
Pick your poison really

The problem is the people that put the government in power did so on the clear understanding that their investment in land and property is in no way to be taxed.

And from that point on you have laughably pathetic schemes to "boost" the housing market by some sort of childrens party trick with a stick and a hat saying "interest rates, starter loans, shared ownership .... TADAA !!!!"

We all wanted housing to be a commodity (apparently) and if we didn't our parents did. And now we have to live with those choices. And I rather wish we would, rather than having a continual whinefest about it.

If we really wanted change, we wouldn't have repeatedly voted for parties whose entire reason for being is to prevent any change (for the wealthy) at all costs.

This entire thread is really rich people whining and pretending they are poor ickle hard done by things. No one living in a shitty HMO spending all their time calling the landlord for repairs is going around saying "You know what would help me ? If stamp duty were to be changed so less fewer rich people pay it."

I grew up in a house that was one of 3 million built between 1930 and 1935. Let that sink in. I would be amazed if we have built 3,000 since 2020.

SDLT brings in £18b/year, how should the government raise the shortfall if it is abolished?

The government should be looking at the bigger picture of how they can actually grow the economy, not just squeezing more and more out of taxpayers and harming growth.

Where is the government on growth currently?

I had to laugh at a recent clip of RR in her hard hat somewhere up north talking about 'this Labour party being the party of growth'. It's so funny it makes you want to cry.

According to gov.uk it's 15 grand on a £500,000 house so I don't know what the big issue is really unless everyone is wanting to down size to houses worth millions of pounds.

I’m not necessarily sure about the downsizing arguments. Obviously this is a generalisation, but most pensioners looking to downsize will have a) paid off their mortgage and b) benefited from the significant increase in house prices since the house was purchased.

Each of mine and my DP’s grandparents are living in houses bought for around £60k, which are now worth around £400-450k. They have no mortgage. Yes, if they downsized to a property worth, say £250k, they’d have to pay £6k or whatever in stamp duty, but they’ve more than made that back on the price increase over the year, tax free.

obviously, not every pensioner will be in that position and it depends whereabouts in the country you are as to whether that’s even feasible but in the vast majority of cases, downsizing will ultimately save you money (or cost you a small amount of the large profit you’ve made!).

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.

How much is your house worth, stamp duty on a £500,000k house is £15k or thereabouts, so unless you’re living in a £2m property you’re nowhere near hundreds of thousands, if your property is £2m plus I’d not be fussed about £100k. The LBTT in my house is around £4k, not enough of a consideration to put me off moving if I needed to.

In the other example given, downsizing from £600k to £350k would in no way use up all the profit from moving. If people were a bit less hyperbolic these conversations might be more productive.

All things are relative. I mean compared to the previous government, or the government before that .....

Well given there were 216,000 approx new properties built in just the one year in England alone I think your figure of 3000 in 5 years @SerendipityJane is very very wrong
This figure doesn’t include conversions either

But moving house is always going to cost, you’re not paying more for the house, you’re paying for the professional services necessary to make sure the sale is legal, and tax on your new home. You can’t look at a house the same price as yours and expect to incur no costs in moving.

So just another (checks) 14 years to go then. And that's just to match that figure.

Let's hope nobody is born till then, eh ? That would be very, very wrong.

But this is quite a substantial extra cost, on top of the normal professional charges. If you are switching between properties of similar value because of a physical need, then there is no profit from the sale to play with, the purchaser has to produce that £10k from nowhere. If you haven't got it, you can't afford to move!

Finally, there is a big difference in my mind for paying professionals to do their job, and handing over swathes of money for Rachel Reeves to piss away on her appalling mismanagement of the economy.

We’d be ready to move tomorrow but the stamp duty is so high it’s prohibitive on the size and the type of house we’d be able to afford otherwise so there seems little point