Scrapping Stamp Duty could be good, but London families may suffer

Rachel Reeves is mulling replacing the current Stamp Duty regime with a new property tax.

A property expert has revealed his concerns as it could be the end of Stamp Duty, but new taxes could be onerous and may lead to asking prices soaring on properties above £500K as sellers offset losses.

There is concerns what the move might mean for those starting a family in London, where property prices are significantly higher than the average.

Simon Gerrard, Chairman of Martyn Gerrard Estate Agents said, “The existing Stamp Duty regime is unfit for purpose and has had a chilling effect on the housing market, which is why I’ve long campaigned to reform it.

“It’s good to see that the Government has understood some of the issues and is taking action to end the broken system.

“Adding further costs to purchasing a home has only reduced transactions, stifled upward mobility and prevented the efficient functioning of the housing market. This new tax would be paid by the seller, rather than the buyer which means that it won’t be the same tax on aspiration that Stamp Duty currently is.

“However, it’s clear that the Government is motivated by a desire to raise revenues and I’m concerned that this new tax is going to be punishingly high.

“If that’s the case, you’re going to see a ceiling at the £500K threshold for that band of the market, as people avoid falling under the regime, and then a significant jump in values with nothing in between. Prices above £500K will skyrocket as sellers account for the losses caused by the tax, that used to be paid by the buyer.

“What most worries me is the effect on families in London. The housing market is far higher in London, which means any family home will be impacted by this new tax.

“If prices surge higher because of this new regime, how will anyone in the capital start a family? The Government needs to think very carefully what the wider repercussions these changes might have and act carefully. So far many of its attempts at raising revenues through tax, such as the Stamp Duty changes earlier this year, have backfired.”