Wealth manager joins calls for Stamp Duty reform

Calls for Stamp Duty reform have moved from property companies and agents to wealth managers.

Rathbones is the latest to call for an overhaul of property taxes.

The wealth management firm suggests reforming Britain’s property tax system could unlock more than 300,000 additional housing transactions each year and help release part of Britain’s estimated £5.5trillion housing wealth.

When people are discouraged from moving, the impact extends far beyond the housing market.”

Rathbones economists estimate that abolishing Stamp Duty could increase housing market activity by more than 25%, equivalent to more than 300,000 additional housing transactions every year.

Taxing times

Jay Lawrence, Investment Director based in Rathbones’ Guildford Office, says: “Property taxes influence how people behave.

“We increasingly hear from clients who are staying in homes that no longer meet their needs because moving simply doesn’t stack up financially. Many older homeowners tell us the costs of downsizing can wipe out much of the financial benefit, while younger families face significant barriers when trying to move into homes that better suit their circumstances.

“When people are discouraged from moving, the impact extends far beyond the housing market. Labour mobility falls, homes are used less efficiently and opportunities for economic growth can be constrained.”

When people are discouraged from moving, the impact extends far beyond the housing market.”

While housing wealth can provide financial security, much of it remains illiquid and tied up in property.

Rathbones argues that a more mobile housing market could help create the conditions for some of this capital to be deployed elsewhere in the economy through investment, business creation, spending and intergenerational wealth transfers.

Earlier this summer, Rathbones’ annual study, ‘Don’t Bet the House’ found Britain’s longstanding attachment to housing as a source of future wealth is misplaced, with property continuing to underperform growth in invested portfolios

Lawrence adds: “Britain has accumulated an extraordinary amount of wealth in housing. The question is whether the tax system encourages that wealth to remain locked away or helps create the conditions for some of it to flow more productively through the wider economy.

“Strong economies depend on people, homes and capital flowing to where they can be used most effectively. Property tax reform will always create winners and losers, but the ultimate test should be whether it supports a more productive and prosperous economy.”