Scrapping stamp duty would be cost neutral, former Tory treasurer says

Katie Morley
This newspaper is campaigning for the Government to cut stamp duty after a number of studies concluded that the tax is clogging up the housing market - Chris Radburn

Scrapping stamp duty would be cost neutral as homeowners would spend more on home improvements, a former Tory treasurer has said.   

Speaking to the Sunday Telegraph, Lord Stanley Fink, who is one of the Conservative's biggest donors, said high stamp duty bills are prohibiting even wealthy home movers from spending money on furniture, home decor and extensions.  

Scrapping or cutting stamp duty on home purchases would lead to a rise in such spending, he said, resulting in a loss-cancelling boost for the Treasury from a bigger tax take via the home improvements industry.  

This newspaper is campaigning for the Government to cut stamp duty after a number of studies concluded that the tax is clogging up the housing market. 

One report by the Centre for Economics and Business Research found stamp duty is preventing 45,000 house purchases a year, including families with children who need bigger homes.

Following pressure the Chancellor used his last Budget to help first-time buyers get a foot on the ladder via a stamp duty break on purchases up to £500,000.

For other buyers stamp duty is still paid at 2 per cent on the value of homes purchased between £125,000 and £250,000, 5 per cent between £250,001 and £925,000, ten per cent up to £1.5 million and 12 per cent above this level.   

Lord Fink said: "If you look at transactions at the top end of the market it is clear the market is not functioning. And I worry that having put the [stamp duty] tax on the purchase of homes, that for the first time, people are looking to rent rather than buy when they never would have before. 

Lord Stanley Fink is investing millions in energy efficient modular housing Credit: Telegraph

"Historically when people bought at the top end they tend to spend money on their homes through improvements - new carpets, new kitchens - people want it to be right. It is one of the few expenses and areas of the economy which stays domestic, which means the tax on this industry goes back to the Government, so by cutting stamp duty it would not lose out. 

"I do believe that if the Treasury found that because of stamp duty transactions were drying up significantly - they would want to cut it. But anything that's seen to be a tax break to the rich is going to be hard to implement, especially in the current climate." 

Meanwhile Lord Fink has invested more than £3m in modular home developer, Project Etopia, which claims to shave up to 25 per cent of the cost of building homes by using a flat-pack style construction technique.  

The homes are also super energy efficient, meaning owners are likely to have very low or non existent energy bills. This is because their homes contain solar panels capable of generating more energy than the home uses. 

If such homes catch on it could allow the Government to extend its annual house building targets as they can be built in just four weeks, compared to several months for a standard brick house.