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Annual growth of 3.5% in Northern Ireland house market

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Ex-Housing Minister calls for higher Stamp Duty threshold

Thursday 18 April 2019

Dominic Raab MP, announced a suite of recommendations to shake up the housing market, including changes to stamp duty in England and Northern Ireland.

Former Housing Minister, Dominic Raab has called for changes to scrap Stamp Duty Land Tax (SDLT) on property purchases in England and Northern Ireland worth less than £500,000.

If implemented, the changes would not impact Scotland and Wales, who in recent years have been granted devolved powers to set and collect their own levels of equivalent taxation on property purchases.

Background

In recent years there has been significant change to who pays SDLT, and to what amount. In 2016, a one per cent surcharge was introduced for the purchase of second properties, affecting private landlords and second-home owners. A year later, SDLT was scrapped for first-time buyers on a purchase of up to £300,000, with a reduced rate of tax for homes costing up to £500,000. This introduction was furthered in last year’s Autumn Budget where all first-time buyers of Shared Ownership properties also became eligible for the SDLT relief. This was applied retrospectively.

Back in 2013, former Deputy Prime Minister Nick Clegg revealed his clash of opinion when similar proposals were announced, as he said that the wealthiest home owners should "pay a bit extra". According to the Conservative MP’s that were backing this change, the cut in Stamp Duty would have resulted in £2.4 billion less tax being paid to the Exchequer each year.

Further Recommendations

Raab calls for sanctions to be imposed on developers who fail to build houses at the rates they promise, when they purchase a plot and secure planning permission. In an interview with the Daily Telegraph he also identified further solutions to fix the broken housing market:

  • More government land to be released, with councils given more power to sell sites to smaller developers 
  • Design by tender after outline planning permissions are received
  • Fewer impositions on councils who fail to get enough homes built
  • Capital Gains Tax (CGT) for landlords to be scrapped on up to £35,000 where they have sold the property on to a sitting tenant.
  • Digitise land registry records and support more modular housing

Raab could be in the running as the next Conservative Party Leader, should current Prime Minister Theresa May resign as per her Brexit promise.

What Propertymark is doing

NAEA Propertymark actively campaigned for first-time buyer relief from paying Stamp Duty. In England’s first year of exemption, we reported that it had benefitted 69,000 first-time buyers. We had similar results in Scotland, where the zero-rated Land and Buildings Transaction tax threshold for first-time buyers was raised to £175,000 in July 2018.

We also commented on digitising Land Registry in our Geospatial Commission consultation response in which it was agreed that it would be valuable for estate agents to be trained in the use of Geographic Information System (GIS) mapping software and for a digital property log book to be introduced for all homes bought and sold.

Propertymark resources

For more on stamp duty and land tax, read Propertymark’s comprehensive guide for home buyers here.