Stamp Duty Land Tax (SDLT) in its current form is a ‘major obstacle’ to the housing market, particularly for older people wishing to downsize, according to Dudley Building Society.
Jeremy Wood, chief executive officer of Dudley Building Society, believes that stamp duty is a tax that serves little purpose except being an income stream for the government.
“There will be a general unwillingness to consider any reform which reduces the income to the Exchequer,” he said.
“However, the wider implications of a housing market which is effectively at a standstill, are in part being caused by what has become a pernicious tax on mobility. No one seems to want to consider the indirect costs to the public purse that stem from this.”
According to Wood, a particular case in point is the number of older property owners who are put off moving to smaller residences and freeing up ‘frozen’ capital, because they have to pay SDLT on a new purchase.
“While releasing equity in one’s property is becoming very popular via equity release, many people either need to move because of advancing age and infirmity or because they want to release capital by downsizing, rather than by taking on another loan commitment via equity release,” he explained.
Although recommendations have been made recently – including transferring stamp duty payments to the seller rather than the buyer – the SDLT effect would be magnified for downsizers, rather than reduced.
Wood concluded: “Perhaps, by abolishing SDLT altogether and creating that tax on sale, at least it would be a more transparent and, in the longer term, a more acceptable course of action.”