Call to reform stamp duty and Home Reports in Scotland
The National Association of Estate Agents (NAEA) has urged the Scottish First Minister, Alex Salmond MSP, to make “full use” of his new powers to reform Stamp Duty Land Tax since the newly-passed Scotland Act grants the Scottish Government full powers over the rate of stamp duty.
“Property in the UK is already over-taxed compared to our European neighbours,” said NAEA spokesperson for Scotland David Mackie, “and the market in Scotland, as well as elsewhere in the UK, is clearly struggling to recover from the economic slow-down.
“Now that he has been granted these extra powers, it is the perfect opportunity for Alex Salmond to make full use of them and scrap the unfair ‘slab’ structure of stamp duty. He should replace it with a fairer, more logical system that ditches the extreme jumps in taxation created by the current system and set by the UK Treasury.”
Stamp duty is currently charged to home-buyers in large brackets according to house prices as opposed to a sliding scale. This creates ‘slabs’ of tax with jumps in the charge levied; in particular this affects properties either side of £250,000 where stamp duty jumps from 1% to 3%.
“The UK Government has made it clear that it has no intention of addressing the current system, despite a strong case for reform. Stamp duty distorts the housing market, and especially hits first time buyers,” said Mackie, who also suggested that Salmond should use the opportunity to announce an end to the Home Report that has been compulsory in Scotland since 2008.
“Home Reports are widely seen as an extravagance in Scotland; they haven’t had their desired impact and it’s not too late to suspend the scheme. Salmond should give the Scottish housing market a double dose of support by scrapping Home Reports, reforming stamp duty.”
Meanwhile, stamp duty continues to be an issue elsewhere around the UK. Peter Rollings, CEO of estate agent Marsh & Parsons, commented: “It’s rare to see both Halifax and Nationwide’s figures sing from the same hymn sheet, but both indicators show that national house prices weakened in April. After a strong start to 2012, the end of the stamp duty exemption and tightening lending conditions have taken their toll on buyer activity outside London. Banks are cautious over the knock-on effect of the eurozone crisis on the cost of raising funds – not to mention the dubious economic outlook for the UK – and have begun to constrain lending to the lower end of the market.
“But in contrast, the market in many parts of London – especially in prime areas – continues to move at a different pace entirely. The much higher proportion of cash buyers and equity rich investors has afforded the capital protection against the tightening the wider mortgage market and stamp duty changes, and unless lending improves in coming months, the growing gap between London’s market and the rest of the UK will become a yawning chasm.”
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