When our esteemed Chancellor, George Osborne, stands up at the Ballot Box for his Autumn Statement in the Commons this year this is what we would, ideally, like him to address.
The housing market, particularly in London, is grinding to a halt burdened by the huge weight of the SDLT charges that were imposed in last year’s Autumn Statement.
The cost of moving home, above £1million, is now so immense that people are choosing to ‘stay put’. We all know that when these changes were imposed the Tory Party was concerned about a likely ‘hung parliament’ in the May Elections and, as such, wanted to show the Electorate that they were just as prepared to tax the ‘property wealthy’ as an alternative to Mansion Tax. They thought this would be a sop for the ‘don’t know’s’ who were likely to vote.
Who knows if this was a contributing factor to the electoral outcome but, whatever the reasons, it is now a stumbling block and since there are less transactions (particularly in London) not only does the consumer suffer but so does the government in having less revenue and an illiquid market which is not good for anyone.
Paradoxically, this may be a good thing for building contractors/material suppliers as more people extend their homes or excavate basements. But the trickle-down effect that this is now having is impacting on the lower end of the price scale and this must have an affect on consumer spending and growth.
My Solution To This Problem
If you look carefully at the cash receipts from SDLT you will see that from December 2014 to the present day transactions and the ‘tax-take’ are substantially down. This is a lose-lose for all but mostly for the government. Here is the remedy.
Either, drop Stamp Duty at the higher end of the market to 9-10% (if this is politically efficacious whilst the spectre of tax credits still lurks in the midst) or, ask the purchaser and seller to split the 12% charge on a 50/50% basis.
Purchasers will be ‘cock-a-hoop’ at paying 6% Stamp Duty which is roughly the equivalent of three years ago, and will think that ‘Christmas has come early’. Although the sellers will not be delighted if the market is boosted by these measures they may gain some compensation in the growth of prices. If the government gains more revenue from Stamp Duty this will be an excellent time in the battle to reduce the deficit and it could be a win-win for all.
Although this problem may at first be concentrated on London, after all it does generate 30% of SDLT revenues, we are in a consumer-led recovery and you don’t want to put this at risk by a slow down in spending.
The proposals regarding extending Permitted Development by turning office buildings into residential is a magnificently elegant solution and is being wisely extended as an instant source of private new homes which will help the Prime Minister meet his target of 200,000 homes built in the UK this year.
Anything that will speed up the planning process, that at the moment is being ‘bogged down’ by the ecologists, environmentalists and conservationists, is a good thing as anyone will know if they try and process a planning application in today’s environment. ‘The tail’ of ecology is now ‘wagging the dog’ and the housing stock of the UK is paying a hefty price for this.
I have often suggested that the Department of Environment should take more responsibility for planning adjudications (not just appeals as present today) so that planning (and planning alone) becomes the total focus of any adjudication rather than the preoccupation with localism, nimbyism and the judicious electoral prospects of the councilors.
If you want more homes built in the UK please take heed of these well-intended proposals.
Written by Trevor Abrahmsohn.
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