Call for cut to stamp duty
An overhaul of the stamp duty land tax will help stimulate the ailing housing market, according to a leading property services firm.
Jones Lang LaSalle has called for houses priced at up to £150,000 be exempt from stamp duty. The exemption currently applies to homes valued at up to £125,000.
The proposals, outlined in the company’s report on the residential sector, titled Residential Eye, would see a 2 per cent rate applied to homes valued between £150,000 and £500,000, 3 per cent for those valued up to £1 million and 4 per cent for any home valued over £1 million.
At present, stamp duty ratchets up to 5 per cent for properties worth £1 million or more and 7 per cent for anything above £2 million.
The report argued that higher rates in the ‘upper echelons’ of the market ‘massively reduces market activity’. It argued that lower rates would ‘help off-set’ high deposit requirements.
Jones Lang LaSalle also called for the tax to be abandoned for all new-build homes – or at least those worth up to £350,000.
‘We would argue that this should be a permanent change,’ said the report. ‘It should definitely be applied to all new purchases by owner-occupiers, whether first-time buyers or existing homeowners, to ensure a range of homes are built and that not only the bottom end of the market is supported.’
The company also cast doubt on the effectiveness of the introduction of residential real estate investment trusts – or REITs – as a means of bringing institutional investors to the housing sector.
It argued that low income returns, concerns over property and management and the lack of appropriate lot sizes still constituted ‘serious barriers’ to attracting funds to the build to rent sector.