The Society of Licensed Conveyancers (SLC) has called for the government to abolish stamp duty to create a more “buoyant and vibrant” market.
The number of landlords acquiring property has dropped significantly since the 3% stamp duty surcharge was introduced at the start of April. Also, with the basic rate of tax relief landlords can claim on properties also set to fall to 20% from April 2017, there is widespread concern that many more people will be deterred from investing in the buy-to-let sector, which would reduce the volume of much needed homes available in the rental market.
But the SLC believe that scrapping the stamp duty land tax would not only create a more buoyant and vibrant property market, but it would lead to a “marked hike in investment and building of new homes, not to mention create a “much more straight forward and quicker home buying and selling process”.
Simon Law, chairman of SLC, said: “Stamp duty land tax is perhaps the most inaccurately named tax in existence. There is no stamp involved, it is not a duty, and it is on assessed property values rather than land. In fact the only word that is in any way accurate is tax. In reality, SDLT is a direct property transaction tax.
“It is ironic that the government is engaged in a review to improve the home buying process when it has introduced legislation that actually makes the process more complicated and tortuous. It is an insult on top of this that HMRC looks to conveyancing lawyers to act as tax collectors.”
Last month, the TaxPayers’ Alliance also urged the government slash stamp duty rates by 50% immediately with a view to abolishing the levy altogether.
The pressure group and think tank fears that tenants will end up bearing the cost of the latest tax rises for landlords as it will result in a reduction of homes on the rental market that in turn will push prices higher.
Many landlords will soon be left with no alternative but to pass extra costs onto tenants as they will lose the ability to offset all their mortgage interest against tax on rental income, but the TaxPayers’ Alliance believes that the government still has an opportunity to undertake ‘real reform’ to tackle the housing shortage in the UK and stop rents from increasing, by modifying or abolishing stamp duty and mortgage interest tax relief changes.
“For decades politicians have failed to tackle the root causes of the housing crisis: a chronic lack of supply,” said Jonathan Isaby, chief executive of the TaxPayers' Alliance.
“Stamp duty is still punitively high and gimmicky tweaks to the tax system will ultimately end up penalising tenants and increasing rents,” he added. “The new Chancellor should now seize the opportunity to drastically simplify and reduce property taxes, while removing planning restrictions which prevent huge swathes of land from being built on for no good reason at all.”