Estate Agent calls for Stamp Duty change

Ahead of next week’s Budget, Nick Salmon, commercial director of leading independent estate agency, Harrison Murray, is calling on the Chancellor, Alistair Darling, to amend the rules on Stamp Duty Land Tax (SDLT).

At present, the tax is paid on completion by the purchaser of a residential property.

One per cent is payable on purchases between £175,000 and £250,000; three per cent on a purchase between £250,000 and £500,000; and four per cent over £500,000.

Nick Salmon, a Fellow of the National Association of Estate Agents explains that the nature of the tax is causing home sellers to lose thousands of pounds during negotiations and in some cases is blocking potential transactions from being agreed.

“The problem is that the tax is not incremental. For example, if you pay a pound over £250,000 you pay three per cent on the whole of the purchase price. That’s £7500. Pay a pound less than £250,000 and the tax is only £2,499. Purchasers know this and in consequence any property on the market at between £250,000 and about £280,000 is blighted. Many buyers will not offer more than £250,000 because they don’t want to pay the higher rate of tax. It is iniquitous that this is causing such hardship in an already fragile market.”

Salmon believes that SDLT should either be scrapped or fundamentally amended.

“It is not only home sellers who are losing out. The Government is shooting itself in the foot by losing revenue from abortive transactions that would otherwise take place, and also losing out when sales are negotiated into a lower tax bracket. Ideally SDLT should be abolished as it is nothing more than an iniquitous tax on moving but the most pernicious aspect of the scheme is the banding which causes such a massive hike in the amount buyers have to pay if they step over the threshold of each level.”

“SDLT should be payable in incremental slices. Using the current percentages a buyer purchasing at say £255,000 would pay 0 per cent on the slice up to £175,000; a per cent on the amount between £175,000 and £250,000; and three per cent on the last £5,000.

“They would end up with a tax bill of £900 instead of the £7,650 they pay under the current scheme. If this were the case many more people would be prepared to pay a lot more for a suitable property. Alistair Darling has been called on many times to revise SDLT but probably has no real idea of what a brake on the market this tax is.”

Nick added: “Harrison Murray’s 18 branches, together deal with thousands of property sales each year and we are telling the Chancellor loud and clear that this issue must be addressed if he is serious about helping to bring this country out of recession. The property market is an engine of the economy and SDLT is one of the factors holding back the recovery.”

For more information, log on to Harrisonmurray.co.uk.