Sunday, Oct 07, 2007
A lot of noise about the stamp duty, but why??
Times: The property market - October 5, 2007
Let me throw in a controversial topic here. Now the stamp duty cost is forked by the seller, not the buyer. I have no problems with some 3 to 5% of the profiteering be given back to society. All this noise about stamp duty is created by those with vested interests on the sell side (lenders, EAs, home owners). Reducing stamp duty will increase house prices by the very same amount -- hence no help for fist time buyers. If the stamp duty were to be reduced just for a selected group of buyers (e.g. the FTBs) then there would be a benefit for that group.
Posted by confused76 @ 11:08 AM (432 views) Add Comment
5 Comments
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1. Jason74 said...
Agreed. Would love to see the stamp duty burden pass from buyer to seller. This would place more costs on those who have already benefitted from HPI, rather than those (esp ftb) who are trying to make their way. The "slab" effect of stampo duty may also act as a brake on HPI as the threshold levels are approached (i know this happens to some extent anyway), as the seller realises that adding 10k to his 245k house (for example) only actually makes him less than £3,500
2. sirgoogle said...
The equivalent of stamp duty in the Netherlands coupled with fees means that the cost of exchanging a property costs the buyer 10 - 12%.
The effect of this is a slow market where people buy houses to live in and tend to hang on to them from at least 5 years. There are trends in the Dutch market but panic selling and buying does not seem to be one of them.
Due to the above the labour force is generally more mobile and prefer to rent. People who buy usually know that their jobs will be there for 10-20 years (or very wealthy).
There are buy-to-let speculators, however most of the extensive rented housing stock is run for public housing by corporations who manage the portfolios for pension funds. Renters have huge protection in law and can (will) go to the local judge if rent is increased above inflation. Most housing I have seen is well maintained and managed.
Despite the huge costs of buying, a bubble did start to form in 2002/2003 due to cheap credit - however to mitigate the problem the local city councils (and central govt (I think)) released land for development. However unlike the UK they released large swathes of land and planned and built new towns with road, rail, trams, schools, shops business parks etc. Since 2005 I do not think that there has been discernable HPI above inflation.
In conclusion - although I hate taxes I do think that high stampduty calms a market.
I would suggest increasing stampduty for the UK not reducing it.
However this would be a short term vote loser and would also fly in the face of Margeret Thatcher's vision of a "Property Owning Democracy" - a vision that both Labour and the Conservatives are still pursuing (how can Labour even dream of continuing a Thatcherite policy?). It is amazing that there are no Parties that seem to have the leadership or b@lls to address this issue head-on at the fundamental level.
3. Retiredbanker said...
Very confused 76;
Stamp duty is a tax paid by the BUYER , not the seller.
4. mybrainhurts said...
The buyer pays stamp duty, not the seller. But your conclusion may still be correct - ie sellers will up prices by 1% to counterbalance the saving, so it inflates prices
5. confused76 said...
MBH
So we agree: it is the seller (not the buyer) who bears the cost of the stamp duty, does not matter who physically pays the tax to the Treasury