City-based property lawyer expresses scepticism about calls to scrap Stamp Duty Land Tax

Solicitors London

Solicitors LondonA City of London-based property lawyer has expressed scepticism about calls to scrap Stamp Duty Land Tax (SDLT).

Prod Shakallis, an Associate at Carter Lemon Camerons LLP, made the comments after a report from the London School of Economics and the VATT Institute for Economic Research claimed the abolition of SDLT could increase the rate of home moving by 27 per cent.

Reforms to the SDLT system, which were introduced in 2014, mean that the charge is now calculated on the basis of bands, ranging from zero per cent for the first £125,000, up to 12 per cent for anything above £1.5 million.

The authors of the report argued that this system puts young families off moving to larger properties, while making it more difficult for older people to sell larger homes in order to downsize.

However, Prod said there would be some significant downsides to abolishing stamp duty: “Scrapping SDLT would mean that the second home higher rate of tax will go too, leaving first time buyers once again in the position of competing with cash rich buy-to-let investors to secure their first home.

“It would also lead to a flood of buyers into the market, further increasing demand over supply, which would likely push house prices even further beyond the reach of many UK residents.”

He suggested that a better approach would be to introduce further reforms to SDLT, most notably increasing the threshold for first time buyers.

“An alternative approach to scrapping SDLT could be to increase the threshold for SDLT for first time buyers from £125,001 to £250,001.

“Further classes of people could also be removed from the higher rate net, such as people who own a share in a property but want to move from renting to buying their own property and parents with their own home who wish to help children acquire a property by co-ownership,” added Prod.