John Stevenson is MP for Carlisle.
The Budget is fast approaching and, aside from the huge issue of Brexit, the Conservatives have to look for some fresh ideas about how to re-engage with the young and aspirational in this country.
We all recognise that housing in is a huge problem. Building more houses is vital, not only to ensure that the next generation actually have places to live, but to ensure that the young feel they have a stake in our society. For generations home-ownership has been a national aspiration – but for the young today it seems out of reach. However, I believe that there is a very simple and cost neutral change that the Chancellor could announce that could make a real difference. I believe that Stamp Duty should no longer be paid by the buyer of a property, and should instead be the responsibility of the seller.
Now, of course, a large part of this tax would be put on to the overall price of the property if this change was made. But there are three key benefits to having the seller pay Stamp Duty.
Firstly, it helps first-time buyers. The reason for this is that the change would mean, quite obviously, that buyers would no longer be responsible for the tax. This matters because when buyers take out a mortgage, the amount never includes the Stamp Duty. Instead, the buyer has to find that lump sum over and above the deposit they have just put down. For first time buyers, who don’t have the luxury of a significant capital amount behind them after having sold another property, this could mean this difference between buying their new home and not.
Which leads to the second reason this change would be fair – and that is that as the seller is the one who (by definition) has access to the large lump sum required they are the ones who are better placed to pay the tax. If they too are moving, they will know ahead of time exactly how much they will be receiving for their property and how much they will have to pay – as will their mortgage advisers.
Finally, the change will help growing families move through the property chain to find the larger houses they will inevitably need. A growing family would only pay Stamp Duty on the smaller, often lower-valued property – opening up the market for larger premises.
This proposal already has considerable support from institutions, including the Yorkshire Building Society, who have published research into the real benefits this change would make.
The YBS found that Stamp Duty was paid by an unprecedented 74 per cent of first-time buyers last year and that, if Stamp Duty responsibility were reversed, first-time buyers in the UK could save an average of £3,625 whilst those moving up the property ladder would save an average of £4,154. These figures are even higher for London, where our young people are especially struggling to get a foothold on the property market.
Of course, there would be issues to work out – including ensuring that those who have properties now don’t unfairly pay twice once the reversal is implemented, and this change isn’t going to solve the housing crisis on its own. I am also well aware that it isn’t the headline-grabbing policy so beloved of Chancellors on budget day, but I do believe it would be a meaningful and effective way of demonstrating to the young and aspirational that the Government continues to support those who want to get on and do better for themselves and their families.
Because if the Government doesn’t ensure the next generation has a stake in the future of the country, then the riskier and wilder policies of our opponents will become more and more appealing.