Treasury is regretting Stamp Duty holiday now, claims leading expert
Professor Michael Ball says policy is causing more problems than it solves as thousands scramble to complete by 31st March.
A leading housing expert has criticised the government’s Stamp Duty holiday as being an ‘unwise policy’ that the Chancellor of the Exchequer Rishi Sunak is likely to be regretting.
Michael Ball, Professor of Urban and Property Economics at the Henley Business School at the University of Reading, told listeners of Radio 4’s You and Yours programme yesterday that the surge created by the policy is creating significant problems within the housing market, including major logjams in the sales.
“It’s part of the reason why the Treasury may be thinking now that it wasn’t the brightest of ideas,” he said.
“The holiday has also created two cliff edges – one at the beginning when it started and many people missed out, and another one on the 31st March.”
Ball told listeners that he believes the market would have seen a rapid return to activity over the past six months without the Stamp Duty holiday, rendering it a pointless exercise.
“Stamp Duty is a poor tax because it’s a duty on mobility and a blunt instrument if you try and use it to steer the housing market,” he said.
“The Chancellor appears to believe he can second-guess the housing market, but that’s an almost impossible thing to achieve – I think they’ve made a serious mistake with this policy.”
Asked to predict what will happen this year, Ball told presenter Winifred Robinson that he expects a rapid recovery in the city housing market as restrictions are lifted, but that the pandemic’s affect would be felt for several years to come.
It’s always seemed an unfair tax to me which asks buyers to pay tax from income they’ve already paid tax on. Additionally this usually means buyers having to borrow the money by adding it to their mortgage to pay the tax which seems grossly unfair.
At the higher end of the market (say, £1 million plus) where people often have large capital deposits this not always be the case and stamp duty is less likely to be financed.
Personally I’d support abolition of Stamp Duty for purchases below £500,000 with a gentle phased increase above.
A headache that could have been avoided if the deadline had been based on sales agreed and not sales completed!