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  • Tax

    House of Lords panel calls for SDLT reform



    A House of Lords committee has called for the government to reform stamp duty because it has “seriously distorted the housing market”.

    The committee on intergenerational fairness also recommended for the government allow local authorities to develop unused land owned by public sector bodies and give them greater freedom to borrow to build.

    The committee report said: “The government should review the effect of stamp duty on the liquidity of the housing market and consider how stamp duty could be reformed to improve the housing choices and availability for young families.”

    Lord True, the chair of the committee, added: “We found that intergenerational bonds are still strong, and the evidence suggested both young and older people recognise the contribution the other makes and the challenges they face.

    “However, there is a risk that those connections could be undermined if the Government does not get a grip on key issues such as access to housing, secure employment and fairness in tax and benefits.”

    Full/source article

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    We seem to reform SDLT on a regular basis, usually in the government's favour. The attached tables show that since 1984, when SDLT was 0% below £30k and 1% above, how it has steadily increased to current levels:

    https://www.stampdutyrates.co.uk/historic-rates.html

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    40 odd yrs ago SD on a Home Counties 3 bed semi was around 2 weeks gross average wage.

    Today it is closer to 28 weeks gross average wage - or 36 weeks of the net average wage.

    Massive transaction costs when moving home do act to dissuade people from moving - when they can extend or do loft conversion for about the same as the dead money on moving fees.

    In turn that removes a chunk of the formerly cheaper homes from the market forever.


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    They need to reduce stamp duty so the elderly don't have to pay a fortune to downsize. No point downsizing if the money released goes in stamp duty.

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    Plus many retirees when "downsizing" will maybe still want say a 3 bed bungalow (so grandkids can sleep over) - which may well cost as much or even more than their 3/4 bed semi or detached house if in similar location.

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    My first house cost £59500.  £0 stamp duty. The next cost £155k so £1550 stamp duty.  I still have these early buys.

    The first house is now worth about £450k and if I were to buy it again the stamp duty would be £26000.  The second house is about £675k and if I were to buy it again today the stamp duty I would pay would be £44000.

    So whilst my first house has increased about 7 fold in value the stamp duty has increased infinitely and whilst the second house has quadrupled in value the stamp duty has increased by a factor of 28.  Nobody could accuse the government of being greedy now could they!

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    If you were to sell, assuming CGT at 28% and no allowances that will be a hefty £254k in CGT on top of the £70k SDLT! And the government have a debt problem!

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    Too right.  I am in the process of selling up my portfolio as I have realised that being a landlord now is actually ruining my enjoyment of life and I have come to realise that you only live once. These are the sort of CGT numbers I am paying.  Additionally, when I bought my own house in 2016 my stamp duty was almost 6 figures.  My wife works really hard  as a teaching assistant and this stamp duty alone was many many years of her pay.

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    SDLT has been brilliant for loft and kitchen extension firms around London! People would rather use the (wasted) money that it would cost them to move up the housing ladder to stay put and (in theory) bank it by investing in making their current home bigger. Unfortunately, the long-term effect it's pulling the next rung out of the ladder for people hoping to step up from the eponymous one and two bedroom "luxury" flats up small family homes. Even longer term it will eventually lead to even more empty-nesters rattling around in outsized homes and/or a return to more instances of three-generations living in one house.

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    Just an anonymous opinion on the Internet.