‘Hypothetical economics’: Readers warn it would lead to housing chaos if stamp duty is abolished

SThere is rumor of tamp duty reform under consideration By Chancellor Rachel Reeves ahead of the Autumn Budget.

Reports suggest the Treasury is considering a new tax on the sale of homes worth more than £500,000 as a step towards overhauling stamp duty and council tax.

Meanwhile, Tory leader Kemi Badenoch literally put the cat among the pigeons Promise to abolish tax completely During his party conference last week.

But Independent Readers are divided on whether the tax should be eliminated, with some arguing that eliminating it is “hypothetical economics” that would only raise prices.

“When stamp duty was cut during Covid, the increase was so big it made it even harder for first-time buyers,” one said, while another warned that any savings would be added to the deposit and lead to a crash.

Many said it would “attract the very wealthy” but do “absolutely nothing” for renters or those who have already been priced out of the housing market.

Options being offered include new exemptions, higher limits, exemptions to “encourage downsizing” or replacing them with a reasonable levy such as a mansion tax.

Overall, the sentiment was that all options carried risks – from taking money out of the economy to driving up house prices even higher by boosting demand.

Here’s what you had to say:

We need people with financial power to bear our share

If the abolition of stamp duty is part of the package of imposing fair taxes on property, then that’s good, but I doubt it it This is just a headline-grabbing topic without any facts.

Sure, we all hate taxes and love the benefits of the NHS, roads, bin collection etc. Unfortunately, we need both, and we also need those who have property and financial power to afford their share and not just leave it to wage earners to bear the burden. Britain is a wealthy nation, it’s just that that wealth is unevenly distributed, and the situation is rapidly worsening.

sorry sir

appeal to rich people

Scrapping stamp duty is aimed at attracting the very wealthy, who could see big increases in stamp duty on properties worth more than £500k.

It will do absolutely nothing to help people struggling to get on the property ladder and will also hit the private rented market, as house prices will rise and greedy landlords looking to expand their property portfolios will raise rents to cover their increased borrowing.

The Greens won the conference season with their audacious but brilliant idea of ​​expanding the right to buy into the private rental market and giving tenants increased rebates and first refusal when a landlord puts a rental property on the market.

If tenants do not wish to buy or are unable to buy, the second in line are local authorities, who can progressively rebuild their social housing stock and reduce their huge housing waiting lists.

Can people really be this stupid?

speculative economics

There was some speculation that Reeves was considering stamp duty reform or replacement with something else long before the Tory conference, so I think the idea thief in this case is probably Kemi Badenoch.

However, abolishing it without creating another tax in its place seems like fantastical economics and a quick way to fuel home price inflation. Badenoch’s announcement appeared to be tantamount to a cut in Tory National Insurance contributions that had not been achieved before the last election.

tanaquil2

Dual purpose of stamp duty

Stamp duty seems to have two purposes: a way of raising taxes – although all taxes are taxes on income, so it is a disguised income tax – and a way of limiting house prices (growth) by taking those taxes out of the housing market.

The latter is necessary because a housing shortage causes home prices to rise, subsequently causing prices to fall as rates rise. Removing stamp duty without building more homes is asking for trouble and won’t help anyone. This would simply mean that the money that would have to be paid in stamp duty would now be added to the money available for deposits and thus house prices would increase… prepare for a crash.

a lot

Encourage downsizing instead

If stamp duty is stopping home owners from downsizing, stopping family homes from coming on the market and leaving people in properties that are too big for them, then the tax needs to be changed to encourage downsizing. (Moving to less square metres, less bedroom properties, not relocating from a higher priced housing area to a cheaper area.) Perhaps a higher priced property could be offered a percentage discount linked to the difference in selling at the smaller property purchase price?

pedrobear

What are the benefits of stopping it?

When stamp duty was temporarily cut during Covid, house prices increased so drastically that it became even more difficult for first-time buyers to get into the market.

I’m not sure what the amazing benefits of stopping it are.

na27

house price inflation risk

House prices rose due to the previous stamp duty holidays, meaning buyers paid the same, were less likely to be able to get a mortgage, and had to put down larger deposits. Perhaps a more limited change to encourage downsizing, especially by the elderly.

alexander boris de feffel johnson

The solution is to increase supply

Reducing or eliminating stamp duty will increase prices. The only way to make property more affordable is to increase supply, especially of social housing.

bezdev

meaningless nonsense

Most people realize that abolishing stamp duty is imaginary economics. So, why should Reeves be forced to answer? The Tories have no fiscal credibility, unlike Farage, so whatever Badenoch proposes now (being so far away from the election) is nothing more than childish politics. I suspect Reeves will ignore it entirely because it’s the same nonsense from a politician that no one takes seriously.

Tabers

Some comments in this article have been edited for brevity and clarity.

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