Zoopla has highlighted a strong case for abolishing Stamp Duty in the UK, arguing that the tax is a significant barrier to homebuyers.
Speaking to MPs on the House of Commons Treasury Select Committee, Richard Donnell, executive director at Zoopla, explained that the high cost of moving is preventing many households from making necessary changes in their lives.
According to Donnell, Stamp Duty is limiting labour mobility, slowing economic growth, and disproportionately affecting southern England, where property prices are higher and the tax burden is most noticeable.
Zoopla’s data shows that 70% of Stamp Duty revenue comes from sales over £500,000, meaning higher-value properties carry most of the tax burden.
Even mid-range buyers are affected. The 5% band starting at £250,000 increasingly hits those purchasing average-priced homes in areas such as Aldershot and Southend, with costs ranging from £7,500 to £10,000.
While many have called for the abolition of Stamp Duty, Donnell warned that it generates approximately £11 billion annually, making outright removal a complex and costly decision for the government.
Zoopla emphasises that abolishing Stamp Duty alone is not sufficient. Any reform would need to be paired with wider council tax changes to make the system fairer and ensure more households benefit from lower moving costs.
The potential introduction of a mansion tax has also been discussed, but Donnell described this as a “non-starter.” Fewer than 1% of homes are valued above £2 million, meaning revenue would be limited, and valuations for high-end properties are challenging and often contested.
Consumer data gathered by Zoopla shows a strong desire among households to move, but high costs, including Stamp Duty, remain a significant obstacle. Reducing these costs could encourage more moves and improve labour mobility.
In addition, reforming Stamp Duty could stimulate economic activity, as higher levels of movement in the property market often lead to increased spending on goods and services linked to home purchases.
Zoopla also highlighted that while property taxes can be complicated, long-term reforms, including replacing Stamp Duty with a proportional property tax, could be beneficial. Such a tax might also replace council tax, reducing barriers to homeownership and renting.
However, Donnell cautioned that reforms are easier to plan on paper than to implement in reality. Convincing homeowners and ensuring that any changes are fair and sustainable will require careful strategy.
Short-term reductions in Stamp Duty could provide immediate relief to buyers and increase mobility, but policymakers must balance this against the substantial loss of revenue and the impact on public finances.
Overall, Zoopla believes that a thoughtfully planned property tax reform, including the removal of Stamp Duty and adjustments to council tax, could make home buying more accessible and help address housing market challenges in the long term.
In conclusion, while the idea of abolishing Stamp Duty has strong support from buyers and property experts, any changes will need to be carefully managed to balance affordability, fairness, and economic sustainability across the country.
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