A London property company has claimed that a 36% reduction in the amount of stamp duty charged on house purchases could increase transactions by 40% a year and generate an extra £9 billion for the exchequer.
The prediction by Mayfair-based buying consultancy Ludgrove is in reaction to Boris Johnson’s pledge during his prime ministerial campaign to reduce stamp duty and ‘get the property market moving again’.
During the campaign he suggested both abolishing stamp duty on homes sold for less than £500,000 and transferring the responsibility for paying it to sellers instead of buyers.
“We agree wholeheartedly with Mr Johnson’s sentiment that tax cuts can create more tax revenue,” says Fraser Slater, CEO of Ludgrove Property (left).
The company’s claim that billions of pounds extra would be generated for the government’s coffers is based on both additional stamp duty revenue from increased sales, but also the boost it would give the economy indirectly.
This, it claims, would increase government receipts from other taxes such as VAT and both employment and corporation taxes.
“If Boris substantially reduces Stamp Duty rates across the board this will go a long way to resolving the broken market in London and The South East,” says.
“A significant market-wide cut will ‘un-gum’ property chains at the top-end leading to greater liquidity throughout the market, as well as a more efficient use of the existing housing stock.
“Lower transaction taxes will also encourage the conversion of dated stock to modernised rental units by investors and new housing starts by developers.”