Hopefully they change stamp duty for good!

[ManyMaybes]

With talk of a stamp duty cut coming this week I certainly hope it’s permanent and not a holiday like last time. This should minimise the stampede to buy that we saw in 2020/21!

Stamp duty really is a despicable tax and especially given house price rises is totally out of proportion for fairly normal houses. In London you can end up spending 6 figures in SDLT on a pretty ordinary house! This means a lot of families just cannot afford to move house ever!

Ideally they would just ditch the whole thing and impose some sort of ongoing land value tax. Just hopefully if they had any sense, there would be an exemption for anybody that bought recently… or even not that recently given the sums involved!

An ongoing land tax could mean people would have to sell to pay it. I. Reality stamp duty reduces the amount people have available to buy so house prices would just increase.

I agree that stamp duty needs adjusting but land tax would be disproportionate in the other way. Those people paying loads of stamp duty have a house worth an awful lot, those with large gardens/land in rural areas often don't. Also, isn't land value tax sort of covered by council tax bands etc?

My friend in yorkshire renting a 100k house pays more council tax than I do. I own a 2 bed flat in the london suburbs valued at £450k.

I think this is one of those things that should be something someone can defer until sale of the property or death and pay out of their estate (before inheritance tax). This is likely to only be a particular issue for people whose home value increased hugely, and they shouldn’t be able to just bank that increase and pass it on through inheritance anyway.

It would also keep house prices from increasing further as people need to plan for the ongoing costs of their house. The actual amount would need to be carefully balanced though, alongside other taxes.

Council tax bands are a joke really though. And the lowest council tax in the UK is in Westminster and Wandsworth where houses are worth millions. I would expect any land value tax to be based on house prices in the area specifically, or actual sold prices for future sales (like they do with stamp duty basically).

So maybe any future sale pays x% of the sale price annually (plus inflation, but not house price growth) and any existing owners pay some estimate. But I would say anyone who has bought already (and paid stamp duty already) should not have to pay the new tax for something like 20 years or however long it would take to pay off what they already paid in stamp duty.

Plenty of people fall into the "cash poor, asset rich" bracket. How would you expect someone on a small pension, but with no mortgage to pay any kind of extra annual tax? Council tax is already a large fixed part of many people's budget?

An ongoing tax o stead is a bad idea but I prefer a permanent change to stamp duty when it happens

I've never really understood stamp duty - it seems back to front charging the buyer. At the very least it should not be payable on properties under £1 million given house prices these days.

I wouldn't want sellers to have to pay a tax because it would deter downsizing.

However, I do wonder how this government expects to pay for services with these tax cuts.

Indeed, this is a challenge. But there are different scenarios to consider:

1. Pensioner in a large home worth a large amount. This should be an incentive to downsize and free up larger homes for families. Sentimentality would argue why should someone leave the home they have always lived in? Well in this case I would say the tax could be paid on sale of the house or on death.
2. Someone in a ‘normal priced’ home who has paid off their mortgage over time but doesn’t have a large amount of savings or income. Falls into the same situation as above, or the home of it is not worth so much should not generate a significant amount of tax burden - probably replace and be similar in amount to council tax.
3. Someone whose home has massively increased in value. In this case the tax due would be far more than they would have budgeted for anyway if the tax had been in place when they bought the house. But this is all unearned wealth so I have limited sympathy. Same as above, they can pay the tax when they die or sell up.
4. Someone who budgets for the tax when they buy the property but has a reduction in income either planned (retirement) or unplanned (illness, redundancy etc) and they can’t afford the tax. This is a similar risk people take when they take on a mortgage but same as above - they could opt to roll up the tax due to when they die.

A bit complicated, granted, but for me a far better option that the current messed up stamp duty system that we have that prevents people from
moving house at all in many cases.

But if you are just going to defer this land tax until you sell, isn't that in effect the same as stamp duty, albeit you pay it on your sold property rather than purchased one?

It should be replaced by a tax paid by the seller imo, akin to a capital gains tax.

I do wonder how this government expects to pay for services with these tax cuts

They’ll just cut services as well.

Disagree with an annual land value charge - other countries have that and it doesn’t make sense

Why should people who have long term family homes be forced to downsize to pay a tax after paying a mortgage. Homes are for living in - not for creating a buyers market or for flipping

. And adding to inheritance - well do you really need anything more to be charged on top of the 40%?

it’s a daft idea that will create havoc

And there will always be a stamp tax - that’s the same as other countries and actually the uk is more lenient in some ways with its reliefs. But the rate needs to be reduced - so that’s what will happen

I’m really against a land tax as it would disproportionately affect rural areas where house prices have been pushed up by people moving into the area and others buying second homes.
we are just starting to see action against second homes in many parts of the country and the last thing we need it a land value tax. I used to own a two bed terrace and the council tax was higher for me than someone in London would pay on a four bed detached house!
the land value tax on my current home would be huge but it’s not some expensive posh house it’s just because of where it is.
a land value tax would probably work in some cities but in rural areas would just add to the current housing crisis.

stamp duty isn’t great but at least you know what you got to pay and once it’s paid you don’t have to worry about it.