There has been much comment upon the fact that the UK property market is the most heavily taxed in Europe, running at around four times the rate in Germany, but one subject that has missed the headlines is the fact that buyers pay stamp duty as opposed to sellers. Some prominent members of the property investment community believe it is time for the government to take another look at property stamp duty and whether indeed it should be sellers covering this particular cost.
When you bear in mind that property investors are by very definition investing a significant amount of money into the property market, why should they be further penalised by an out of date tax. Many people will not be aware that stamp duty was brought in to cover the actual cost of transferring property between buyers and sellers although when you bear in mind stamp duty on properties in excess of £2 million is now 7%, how does that tally up?
Reduce buyer costs
You can argue that a seller of property will eventually become a buyer of property but by reducing the cost of entry into the UK property market this gives potentially more flexibility and more funds – especially for first time buyers. There is also an argument for buyers and sellers splitting the cost of stamp duty between each other which seems to be very fair?
Quote from PropertyForum.com : “Are sellers returning to the UK housing market?”
We have grown up in a market in the UK where buyers have always paid stamp duty, where stamp duty levels have continue to rise and successive governments see the UK property market as the golden goose which continues to lay income tax eggs. If you look back at the ever increasing cost of stamp duty across the UK it is mind blowing to think of the billions of pounds which had been paid in this way. In many ways investors are being penalised for being proactive, for keeping the UK property market liquid while sellers keep costs to a minimum.
Is this fair on sellers?
While it may be a little harsh to transfer the total cost of stamp duty from buyers to sellers, who can wholeheartedly argue that sellers should not pay part of the cost? At the end of the day it is the seller who is left with liquid funds and the buyer who has acquired an asset thereby putting themselves at the beck and call of the investment markets. It is highly unlikely that the UK government will look at property tax in the short to medium term because no doubt this will be played out as rich investors gaining at the expense of the less well-off in society.
It has taken some very prominent names in the UK property market to step forward and air their views on stamp duty, it would take a brave government to take heed of these views although unfortunately it would be dangerous to hold your breath. The billions upon billions of pounds which the property sector earns for the UK government is obscene, especially when you bear in mind the original reason for charges such as stamp duty.