A stamp duty cut could reinvigorate the buy to let market and the wider economy as the country comes out of lockdown.
That’s the view of David Alexander, joint managing director of lettings platform Apropos.
He says recent data produced by HM Revenue and Customs shows half the number of residential properties were sold in May compared with a year ago amid the lockdown.
Although demand is increasing post lockdown, Alexander insists there is an urgent need to kick-start the UK economy with a review of Stamp Duty Land Tax as it applies to England and Northern Ireland, and Land and Building Transaction Tax in Scotland.
“Now is an opportune time for the government to make necessary changes and a reduction in tax on certain transactions could directly increase the volume of properties being sold, subsequently benefitting the government and what can be obtained” insists Alexander.
“As it stands, the rate of tax on a second property prevents many individuals from buying an additional dwelling, either as a second home or a property to let” he continues.
“This tax varies from three to four per cent depending on which part of the country you are in. It is important to remember that not everybody who purchases a property is a multi-millionaire – for example there are many people who have worked extremely hard and have an aspiration to buy a second property to supplement their pension. The additional tax can be very restrictive and is often a real deterrent” Alexander believes.
He says any increase in tax to recoup Coronavirus public spending increases could backfire and produce fewer transactions.
And he adds: “There is also a pressing need for the government to assist those who are making their last move by reducing associated taxes on their final property transaction. Many retirees would like to downsize and move into a property that is more suited to their lifestyle, however, in many circumstances they decide not to pursue this move due the associated costs, as it would impact the inheritance of their families. By implementing a tax-free final property purchase, the volume of transactions at the top end would also increase and subsequently bolster the economy.”
This post has originally been featured in Letting Agent Today.