Anne Main MP: Stamp duty causing 'sclerosis' in housing market

Conservative Anne Main calls for a re-evaluation of the 'grossly unfair' stamp duty and an end to the post code tax preventing British home ownership. A defining aspect of British society, as set against our continental neighbours, is our aspiration to own our own homes. An ONS survey last year found that, for the first time, the percentage of people owning their own home has actually fallen. I believe there is now a wealth of evidence to suggest that one of the biggest obstacles to home-ownership for first-time buyers, the elderly, and the population in the UK, is Stamp Duty Land Tax (SDLT). The IFS has said it is ‘among the most inefficient and damaging of all taxes’, yet since 2003 it is worth noting that even with falling transactions, the amount SDLT has almost doubled. In the last year alone the tax intake rocketed by nearly 35%, thanks to a recovering housing market. According to the latest figures from Savills, the average house price in England and Wales is now over £250,000. As SDLT is levied on a ‘slab’ basis, any transaction just £1 over the threshold will be charged at the higher rate of tax, on the whole amount. For example, if a property is sold at £250,000, the 1% SDLT due would be £2,500; however, if the price of the property were to be increased by £1, the tax due would be £7,500. The recent release of these figures from Savills demonstrates how much of the country will now be subject to paying a tax that cannot be added on to a mortgage, in addition to saving for the deposit. This does severe damage to the liquidity of the housing market, barring families moving to appropriately-sized homes, and elderly people from downsizing. According to Shelter, if just 20% of older home-owners moved into a smaller, more manageable home, 840,000 family-sized homes would be released onto the market. Sclerosis in the housing market has further ramifications for the labour market as moving home becomes a financial burden, even for those going to a more highly paid job. Taking average current prices in my constituency, a person moving home on 4 occasions in their lifetime may expect to pay £65,000 on SDLT alone, which is nearly double the average yearly salary in St Albans. In other words, you may have to work nearly two years of your earning life just to move home. One of the most salient pieces of data in the debate is the number of people paying SDLT at 3% compared to 2003. I believe it is grossly unfair that since then this number has risen sharply from 1 in 10, to 1 in 4 today. This cannot continue. We have been repairing the nation’s finances over the last 4 years. With average house prices now in the 3% bracket, I do, however, think it is deeply unfair that families and individuals striving to own their own home are being asked to pay, what is in effect, a post code tax for this very British of aspirations.