UK Housing Coalition Calls For Stamp Tax Repeal
The UK real estate market is showing some improvement amid a recently extended moratorium on the nation’s land stamp tax, but some industry groups warn that without another extension on the moratorium, or even repeal of the stamp tax, those gains could be lost in 2010. The land stamp duty is a tax imposed on UK mortgagees and varies depending on the purchase price of the home. In 2008, the minimum purchase price threshold for a 0% tax rate was temporarily raised from £125,000 (US$206,840) to £175,000. The tax rate for homes purchased for more than £500,000 was capped at a maximum 4%. Last week, the Council of Mortgage Lenders (CML) said the tax holiday spurred a growth in first-time home buying. In addition, the CML said, gross lending in the buy-to-let mortgage market grew for the first time in two years during Q309. The number of outstanding buy-to-let loans grew to 1.2m, representing 11% of all mortgages at the end of Q309 and the value of outstanding buy-to-let mortgages increased 2.5% to £144.2bn. These positive signs may be erased in 2010 if the stamp tax is not put off under another moratorium or eliminated altogether, according to UK housing industry groups. Similar to the lobbying efforts to extend the first time homebuyer tax credit in the US, some UK housing industry groups are calling for repeal of the stamp tax. The 1808 Coalition — named for the year the stamp tax was created — consists of a number of industry groups, including the Association of Mortgage Intermediaries (AMI), Association of Residential Lettings Agents (ARLA), Building Societies Association (BSA), CML, Home Builders Federation (HBF), National Association of Estate Agents (NAEA) and the National Landlords Association (NLA). “The Coalition believes that Stamp Duty is an anachronistic tax which, in its current form, is preventing a recovery in the housing sector – it limits market flexibility, creates regional inequality and its slab structure unfairly distorts the housing market. With the Pre Budget Report due soon, now is the time for the Government to take action,” said Peter Bolton-King, NAEA CEO said. According to a NAEA survey, 91% of UK real estate agents believe the tax holiday should be extended and 86% said they believe the tax is unfair. “Stamp duty land tax is a pernicious tax which has failed to keep pace with house price appreciation. It creates an unbalanced housing market and discourages investment in housing. Reform is needed now,” said NLA chairman David Salusbury. Write to Austin Kilgore.