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Cut 'crazy' stamp duty/sellers pay

Covering Market, Trends, and Practical (but see LEMON-AID for Building & DIY)
Calcaria
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Cut 'crazy' stamp duty/sellers pay

#5611

Postby Calcaria » November 16th, 2016, 1:18 pm

THE TELEGRAPH

Stamp duty: housebuilder raises spectre of sellers paying tax
By Isabelle Fraser and Rhiannon Bury
http://www.telegraph.co.uk/property/hou ... aying-tax/

The chief executive of one of the UK’s biggest builders has raised the spectre of shifting the burden of stamp duty from buyers to sellers in order to resuscitate the stalled housing market.

Pete Redfern, chief executive of Taylor Wimpey, described stamp duty as “a charge on moving house” in a landmark report on the decline of home ownership.

Publication of his year-long investigation into the ills of the housing market came as Clive Fenton, chief executive of retirement house builder McCarthy & Stone, wrote to the Chancellor to call on the Government to scrap stamp duty for older people when downsizing to a smaller property. ...


Cut 'crazy' stamp duty to stop a 'tax on mobility', ex-Tory Chancellor Lord Lawson tells Philip Hammond
By Christopher Hope, chief political correspondent and Isabelle Fraser Rhiannon Bury
http://www.telegraph.co.uk/news/2016/11 ... chancello/

Stamp duty levels are “crazy” and must be reversed to stop a “tax on mobility”, former Conservative Chancellor Lord Lawson has said.

Lord Lawson said Philip Hammond, the current Chancellor, should cut stamp duty in March’s Budget and increase other taxes to pay down the deficit.

The comments came after research found stamp duty reforms have slowed the housing market and raised half as much money as the Treasury predicted. ...

Lootman
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Re: Cut 'crazy' stamp duty/sellers pay

#5667

Postby Lootman » November 16th, 2016, 3:16 pm

Calcaria wrote:The chief executive of one of the UK’s biggest builders has raised the spectre of shifting the burden of stamp duty from buyers to sellers in order to resuscitate the stalled housing market.

That's how it works in the US. There is a "transfer tax" that is paid by the seller, not the buyer. It is deducted from the sales proceeds by the title office.

In a way it makes more sense because the seller is the one getting a lot of money while the buyer is typically stretching to afford the property.

One obvious problem is how you migrate. Buyers who paid stamp duty when they bought would not be thrilled at having to pay it twice, so I would have thought that any transition would have to be gradual, with existing home-owners "grandfathered in" to not having to pay upon exit.

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Re: Cut 'crazy' stamp duty/sellers pay

#5696

Postby TedSwippet » November 16th, 2016, 4:29 pm

Lootman wrote:That's how it works in the US. There is a "transfer tax" that is paid by the seller, not the buyer. It is deducted from the sales proceeds by the title office.

The US is far from homogeneous in this respect. Some states have property transfer taxes, others do not.

In those that do, in some the tax may be paid by the seller, in some by the buyer, and some use a combination. Of course, as with all taxes ultimately the buyer pays, either directly or indirectly through higher pricing. Most US state transfer tax rates appear to be considerably below current UK stamp duty levels.

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Re: Cut 'crazy' stamp duty/sellers pay

#5756

Postby Lootman » November 16th, 2016, 7:58 pm

TedSwippet wrote:Of course, as with all taxes ultimately the buyer pays, either directly or indirectly through higher pricing.

I think it's more a case that both sides pay regardless of who actually is directly liable.

Imagine that the UK had no stamp duty and we had just agreed that you will buy my house for 500K. Before we sign anything the government comes along and introduces a 10% transfer tax. What do we do?

I could say "I now need 550K to net what I want". But you don't have 550K so that won't work. Either I have to reduce the price or the deal is dead. Perhaps the best case is that we agree 525K meaning that we have both effectively paid half the tax each.

In general I think that extra taxes and costs are passed through into the price, and so are inflationary. So for instance the taxes that the government is piling onto BTLs right now will increase rents in my opinion, not decrease them. But that depends on demand being inelastic. On one level it is because everyone needs a home. But at some point there has to be a price ceiling.

TedSwippet wrote:Most US state transfer tax rates appear to be considerably below current UK stamp duty levels.

True, but the annual property taxes that apply in US states can be much higher. In states like Texas, New Jersey and Maine they amount to something like 3% of the property's current valuation. That's much higher than UK council taxes. Even in California with its infamous Prop 13, the ad valorem rate is about 1.2% (albeit on dated valuations) which is more than I pay in the UK on my house.

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Re: Cut 'crazy' stamp duty/sellers pay

#5778

Postby TedSwippet » November 16th, 2016, 9:59 pm

Lootman wrote:In general I think that extra taxes and costs are passed through into the price, and so are inflationary. So for instance the taxes that the government is piling onto BTLs right now will increase rents in my opinion, not decrease them. But that depends on demand being inelastic. On one level it is because everyone needs a home. But at some point there has to be a price ceiling.

Oh yes. The changes to BTL are (in my not very humble opinion!) going to provide a textbook case of the "law of unintended consequences". The government appears over and over to underestimate the second order effects of their whim-of-the-month approach to changing tax rules and rates. If a BTL landlord cannot make a return after tax once the rent price ceiling is reached, they are likely to simply sell up, in which case nobody really wins out of this. Not the landlord, not the tenant, and not the government either.

Meanwhile, sizeable stamp duty rates hobble both the housing and jobs markets. I live in what might be a 'starter home' within commuting reach of London, but no longer work. By some measures I'm 'blocking' someone else from living here and perhaps taking on a higher paid job. But if I were to buy another house elsewhere and move I would pay several thousand pounds to the government in unnecessary tax purely for this privilege (as would my buyer). As it is I have no real need or desire to move. But if I did have an inclination to relocate, it would have to be pretty strong to overcome the deadweight loss of stamp duty I would face. Especially when laid on top of all the other not-inconsiderable tax I pay annually.

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Re: Cut 'crazy' stamp duty/sellers pay

#7048

Postby Wizard » November 20th, 2016, 3:45 pm

Amen to that Ted. I think the changes to BTL environment may have significant fall out.

Terry.

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Re: Cut 'crazy' stamp duty/sellers pay

#9851

Postby TopOnePercent » November 28th, 2016, 10:56 pm

Hmmm... Not sure how I feel about this. Yes, it will save some costs for FTBs, but I've already paid stamp duty on this house, when I bought it, so I'm disinclined to pay it again. The only way I could see that working was to award current owners a 'free' sale to recognise that double taxation isn't a thing.


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