An overhaul of “outdated” property taxes could give the housing market a boost, surveyors have said.
The Royal Institution of Chartered Surveyors (Rics) argued a housing tax overhaul, including ending stamp duty on certain properties, could re-balance the market and reignite activity.
It said the Government should look at what changes are needed to create a more vibrant property sector with a full-scale review of the stamp duty system – and “stamp out outdated housing taxes to help young people buy their own homes”.
Rics said nearly half of professionals responding to its residential market survey feel a change in the tax system is needed to improve the situation for younger buyers in purchasing a home.
This could include incentives for people to downsize to smaller properties, or changes to stamp duty and council tax.
Making it easier for people to downsize from larger family homes to smaller properties would benefit the whole housing chain, it said, bringing more second-hand properties onto the market and helping to tackle housing shortages.
The current system of housing taxation is deterring existing homeowners from moving, especially if they feel the money spent on tax could be put to better use, Rics argued.
Some changes have been made to stamp duty in recent years – including in 2017 scrapping the tax for first-time buyers purchasing homes for up to £300,000.
Abdul Choudhury, Rics policy manager, said: “It is not surprising that our professionals feel that residential property taxation is out of kilter.”
He said stamp duty “makes purchasing, moving and making more effective use of stock costly at a time when we need all these things.
“Council taxes, on the other hand, are woefully out-of-date and are highly politicised.”
He continued: “Given the state of the housing market, it would be prudent for the Government to consider the cumulative impact current taxes are having on behaviour and determine what changes can create a more sustainable and vibrant property sector.
“We would therefore urge the Government to undertake a full-scale review of the SDLT (stamp duty land tax) system – starting with what it hopes to achieve from this tax in terms of revenue generation, market fluidity or another objective.”
A Treasury spokesman said: “We want to restore the dream of home ownership for a new generation.
“Our stamp duty relief for first-time buyers will help over a million people get onto the housing ladder over the next five years.
“There are lots of reasons why people do not downsize, including personal attachment to their home. Transaction costs are often only one of many considerations.”