Government must scrap stamp duty to help solve the housing crisis

Government must scrap stamp duty on home purchases to help solve the housing crisis as £14 billion tax penalises retirees, think tank warns

  • Policy exchange said £14billion stamp duty tax stagnates the property market 
  • Former prime minister Liz Truss cut stamp duty for home buyers in September 

Ministers should scrap stamp duty on residential home purchases to help older people downsize, a think-tank has urged.

Policy Exchange said the £14billion tax stagnates the property market by penalising retirees looking to sell large homes.

Former prime minister Liz Truss cut stamp duty for home buyers in September, and Rishi Sunak kept the measure. But Policy Exchange found people are still disincentivised from moving, leaving elderly couples living in partially empty houses.

An average home would attract a stamp duty bill of £2,300 while a £524,000 house – the average in London – would attract a bill of £13,700. Research from buying agency Ludgrove estimated cutting stamp duty by a third would boost property sales by 40 per cent and bring in £1.4billion in tax revenue.

Last month the Institute of Fiscal Studies said that removing the tax would ‘free empty nesters to fly their coops’, and reported how, second to the stress of moving, elderly homeowners were staying put because they didn’t want to pay stamp duty.

Ministers should scrap stamp duty on residential home purchases to help older people downsize, a think-tank has urged

Director Paul Johnson said: ‘Of all the taxes levied at present, stamp duty has a pretty good claim to be the most damaging and pernicious of the lot.’

Policy Exchange also said the UK economy would get a £17.7billion boost if an additional 100,00 new homes were built each year – equivalent to £600 per household.

The Government has a target of 300,000 new homes per year, a figure that was last hit in the 1960s.

It called on the Government to boost housebuilding, saying the shortage of new homes and over-inflated house prices are dampening investment and families’ spending power.

Tory MP Brandon Lewis, a former housing minister, said: ‘To fulfil our country’s great potential, we must give young people cause to believe that, like their parents, securing a good job will enable them to buy a home of their own, and to settling down and have children.

Policy Exchange said the £14billion tax stagnates the property market by penalising retirees looking to sell large homes

‘These ambitions depend on us delivering more homes. Addressing the UK’s housing shortage is a huge challenge, perhaps the greatest that we face as a country.

‘At the same time, though, solving the crisis holds out the dual prospect of placing rocket boosters under our economy and selling a new generation on the “British dream” of homeownership.’

Ruth Kelly, a Labour former Cabinet minister and senior fellow at Policy Exchange, said: ‘The UK economy is paying the price for failing to build enough homes to support demand.

‘Building more homes is the medicine that both the housing sector and the UK economy requires.’

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