The Daily Telegraph has launched a campaign urging the Chancellor to roll back blistering rates of stamp duty in his first Autumn Statement, citing research by Oxford Economics which claims that “stamp duty reforms have slowed the housing market and raised half as much money as the Treasury predicted”.
With a big front page splash laying into George Osborne’s SDLT reforms, which significantly upped transaction taxes for homes above £1.1m, the newspaper announces that “today The Daily Telegraph launches a campaign calling on Mr Hammond, the current Chancellor, to address the issue in next week’s Autumn Statement”, arguing that “the Government was not aware of the potential impact on transactions that the reforms would have.”
New research by Oxford Economics claims that a 1% increase in stamp duty on £1m+ homes “led to an 8% decline in transactions. This is far higher than what was forecast by the Office for Budget Responsibility, which said the figure would be 2.8%.” That crumbling of transactions – widely reported over the last few months on PrimeResi – means that 1,950 fewer seven-figure properties were sold in 2015 compared what would have been expected without the reforms; that’s a 10% drop in turnover.
The Telegraph quotes a fleet of top Tory types to support its campaign, including Conservative Chairman of the Treasury Committee Andrew Tyrie, who said: “stamp duty on residential property distorts both the housing and the labour markets. Successive governments have made a mess of housing taxation, of which stamp duty’s distortions are only a part.” Old school politician Jacob Rees-Mogg also weighs in, adding that “taxation ought to be about raising the revenue governments need – not the politics of envy. Punitive stamp duty rates seem, unsurprisingly, to have failed, so ought to be normalised at sharply lower levels.”
All this is likely to be roundly welcomed by the prime resi industry, which has been calling for just such a re-reform of the SDLT system since Osborne first started ringing the changes.
Super-prime specialist Turnbull Property and Dataloft recently flagged up the same issues as Oxford Economics and The Telegraph, reporting here on PrimeResi that “2016 tax revenues from prime London sales have been consistently falling below 2015 levels, month after month.” Transactions in prime London have fell by over 40% between March and November, said Turnbull, “and the next time HMRC publishes its stamp duty data it is likely to find its takings greatly diminished”.
Glentree Estates’ boss Trevor Abrahmsohn put stamp duty changes at the top of his Autumn Statement wishlist last month; Banda Property chief Edo Mapelli Mozzi penned an open letter to the Chanceller back in July, beseeching Hammond to do something about punitive SDLT rates, and, in September, top estate agent / economist/ financier Charles Curran took an in-depth look at how the new SDLT system is affecting transaction levels and prices, concluding that “the new SDLT has provided for a fundamental shift in the way property has been taxed” (read Curran’s full analysis of “Why the new SDLT regime isn’t working” here).
- Why the new SDLT regime isn’t working – Charles Curran
- Taxing Times: How to deal with a complex & shifting property tax regime – David Hannah
- Mapped: Stamp duty receipts tumble – but jump by 11% in London (October 2016)
- What’s likely to be in Hammond’s Autumn Statement on 23rd November? – Deloitte