Budget 2012: Focus on stamp duty overhaul and building new homes - not mansion tax, estate agent body says,,
The Government use the Budget to announce it will build more homes and overhaulthe stamp duty system to help first-time buyers rather than a mansion tax, the National Association of Estate Agents (NAEA) says.
In the Budget on Wednesday, George Osborne could unveil new plans that target the 'super rich'. [more details]
However, the NAEA says homeowners already face a 'heavy tax burden' which is stifling the market.
The estate agent body says that property in the UK is over-taxed in comparison to neighbouring European countries and the Government should be focusing its attention on stamp duty to help get the property market moving.
Property ladder: The NAEA says that the Government should overhaul stamp duty to help first-time buyersAround 45,000 homes in England and Wales are thought to be worth at least £2million and would be impacted by a mansion tax, with roughly 80 per cent located in London.
Wendy Evans-Scott, president of the NAEA, said: ‘The market is struggling to recover from the economic slowdown.
‘The heavy tax burden on homeowners as well as a lack of housing supply is stifling the market.’
Last week, the Government unveiled the NewBuy scheme, aimed at helping first-time buyers and home movers buy a new-build home with a deposit of just 5 per cent or 10 per cent.
It is expected the Chancellor will also use the Budget to signal a major housebuilding programme which goes hand-in-hand with the NewBuy scheme, with plans for around 500,000 new homes and a relaxation of planning laws.
But the NAEA says that the Chancellor must take more urgent action to make it easier for first-time buyers to get on the first rung of the housing ladder - and to also make it less expensive for existing homeowners to move.
Lenders and estate agents are calling for an overhaul of the structure of stamp duty as it distorts the market.
Many want a move to a marginal rate system, similar to income tax, to reduce disincentives to buy and sell.
The impact of the duty is seen as particularly harsh above the £250,000 threshold, a price level which includes a quarter of first-time buyers in London and the South East.
Buying a home for £275,000 for example, would see £8,250 go to the Government in the form of stamp duty (use our stamp duty calculator).
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For the last two years, first-time buyers have had a ‘holiday’ on stamp duty which meant they avoided the 1 per cent tax on properties worth between £125,000 and £250,000 – but this is set to end on March 24.
This will mean that buying a home for £200,000 will now cost a first-time buyer £2,000 in stamp duty from next week.
Analysts fear the fragile market will be disrupted by the ending of stamp duty exemption and are holding out hopes that a last-minute extension could be announced in the Budget.
Halifax estimates that four out of 10 first-time buyers have been exempt from paying stamp duty as a direct result of the Government raising the starting threshold from £125,000 to £250,000 and 95 per cent of first-time buyers have not had to pay stamp duty over the period.
The South East and Greater London have benefited the most from the concession, with around seven in 10 first-time buyers paying no stamp duty due to the threshold being raised.
Lenders and estate agents have reported a recent surge of interest from first-time buyers but fear this will be followed by a dip once the exemption ends.
The Council of Mortgage Lenders (CML), whose members are banks, building societies and other lenders, have doubts over the wisdom of reintroducing the 1 per cent stamp duty rate.
The body said: 'We are now likely to see an unhelpful bunching of activity prior to the concession's expiry, followed by a dip.'