Logo

Aston Chase demand reform of Stamp Duty to reinvigorate London property market

PUBLISHED: 10:00 08 September 2017

This home in Chalcot Square was on the market with Aston Chase for �6,250,000. The Stamp Duty would rack up to �663,750.

This home in Chalcot Square was on the market with Aston Chase for �6,250,000. The Stamp Duty would rack up to �663,750.

Archant

A report by high-end, inner London estate agent, Aston Chase, has called for urgent reform to Stamp Duty and Council Taxes

Founding director of Aston Chase, Mark Pollack, thinks that the London property market could receive a boost from a reform of its onerous property taxes.Founding director of Aston Chase, Mark Pollack, thinks that the London property market could receive a boost from a reform of its onerous property taxes.

A report by inner London estate agent, Aston Chase, has argued that onerous Stamp Duty charges have stagnated the London market and require urgent reform. Property transactions in inner London have declined by 7 per cent according to the report, with house prices following suit.

However, the government is reliant on property and wealth taxes for 7 per cent of tax revenues, with 2.7 per cent of GDP made up from the charges (the second highest in the world). Thanks to large estates, receipts from Stamp Duty have increased by £1 billion over the last year. In addition, £2 billion has been bagged due to the 3 per cent levy on second homes according to Black Brick.

However, last year intake for individual properties actually fell 3 per cent on 2015, to £9.56 million. Aston Chase blames this on the tax, which adversely impacted transaction rates.

Gloucester Lodge in Gloucester Gate, NW1 had an asking price of £12,950,000, with SDLT netting £1,467,750Gloucester Lodge in Gloucester Gate, NW1 had an asking price of £12,950,000, with SDLT netting £1,467,750

What is the current law?

Stamp Duty was raised for homes worth over £937,500 in 2014 by George Osborne. The Chancellor increased the tax on a £2 million home by over £50,000, whilst raising tax on a £5 million home by over £160,000. In April 2016, a 3 per cent levy was introduced on second homes.

Buyers pay 12 per cent on the value of properties over £1.5 million homes, just under the average cost of a terraced home in Camden according to Zoopla.com. The average terraced home in the borough at a purchase price of £1,664,878 transacted today would require Stamp Duty of £113,535. A flat costing the average of £720,094 would demand £26,004 in Stamp Duty.

This property on Elm Tree Road with Aston Chase is on the market for �7,950,000. The Stamp Duty will total �867,750This property on Elm Tree Road with Aston Chase is on the market for �7,950,000. The Stamp Duty will total �867,750

What’s the problem?

Aston Chase argue that penalizing the buyer rather than the vendor or owner is unfair, and disproportionately impacts buyers in London. The USA, and several European countries have systems that charge the owner. This week, Mayor Sadiq Khan has argued for devolution of control over property taxes in his draft Housing Strategy for London.

The agent says that Council Tax in its current guise undercharges those living in larger homes, and overtaxes those in smaller properties, argues the estate agent. Council Tax bands have not been updated since 1991 and as such do no reflect changing property values, nor does it differentiate between homes of varying values in the same area.

Mark Pollack, founding director of Aston Chase says: “Stamp Duty is a property transaction tax which has no sound economic basis. It is simply a charge on moving house, which may reduce a person’s ability to move for work, and encourages people to live in homes that are too large (or small) for them. What is required is an annual or exit tax, rather than an entry tax.”

With the penthouse in The Glass Building, NW1 selling for �3.5 million, the Stamp Duty would total �333,750With the penthouse in The Glass Building, NW1 selling for �3.5 million, the Stamp Duty would total �333,750

A recent study by Lloyds Bank reported that 24% of buyers cited Stamp Duty as the largest factor preventing them from making their second step on the property ladder, and meant they relied on the Bank of Mum and Dad to help.

What are the alternatives?

The agent argues instead that Stamp Duty should be reduced or abolished, in its place enforcing a capital gains tax on primary residence to be paid by the vendor. Alternatively, Council Tax could be reformed by increasing rates for higher value homes or the creation of additional top and bottom bands.

Mr Pollack continues: “If the government wants to retain Stamp Duty then there is a very strong case for reforming the structure of the tax so that simply applies to the value of a property above a threshold rather than the whole value. This would cut revenues by half, but could be balanced by Council Tax rates being reformed.”

Another idea is to introduce a Housing Consumption Tax introduced in place of Council Tax. A flat 0.5 per cent annual tax on the gross value of the home would raise £20.8 billion per year, double that of Stamp Duty currently, according to The Institute for Public Policy Research. This system would rely on valuing different areas and properties across the country.

Additional ideas include following the lead of other European countries to implement a UK Net Wealth Tax, or tax free holidays taken on the capital gains received upon the sale of a home could be abolished. Whilst flawed, Aston Chase argues that implementing the taxes would be beneficial long-term and reinvigorate the market for movers.

Simon Deen, director and head of new homes at Aston Chase says: “All the alternatives that exist in other countries are imperfect, however the UK system is in need of a major overhaul. For example, under the current Council Tax system a person in a one bedroom flat can pay the same Council Tax as the owner of a large house, the system is clearly flawed and could be reformed so that Council Tax levels more closely reflect property capital values.”

Whilst government revenues would fall by £10 billion per year due to the loss of Stamp Duty, a flat-rate local property tax would exceed those receipts, says Mr Deen.

Aston Chase are not alone in their demands. Buying agent Black Brick said: “We would be delighted if the government was prepared to revisit the hike in Stamp Duty. Without doubt, it has reduced transaction levels and added considerable friction to the process of buying and selling property.”

How likely is it?

Numerous reports into property tax have argued for a revision of the current Stamp Duty laws to place the onus on the owner, including Barker (2004), OECD (2011) and Stephens (2011).

The government is under increasing pressure to reform the tax, with Tory leadership favourite Jacob Rees-Mogg backing scrapping the tax, and one unnamed minister urging the Chancellor to “deal with” the tax.

Cuts to Stamp Duty on more expensive properties are likely to go down like a lead balloon from a political standpoint, with Mr Rees-Mogg himself owning a Grade II* listed home in the countryside. As many will see cuts to Stamp Duty on multi-million pound homes as ridding the wealthy of a punitive charge that equates to mere peanuts, cutting the tax would likely be seen as political suicide, with tax increases far more likely than tax cuts.

“The reality is that a cut in rate levied on more expensive properties is highly unlikely,” conclude Black Brick.

Mr Pollack concludes: “If the current Stamp Duty regime continues we face the dangerous possibility that more and more vendors will decide that rather than moving home they will simply refurbish their existing home and gradually the London property market will stagnate and government property tax revenues will start to decline – defeating not only the government’s revenue objectives but also creating a moribund property market.”

Aston Chase, 020 7724 4724

Property search


e.g. Oxford or NW3
Powered by Zoopla

Other Hampstead and Highgate property news

Camden mews property transformed into couple’s forever home

A 1960’s Camden property has been redesigned using a number of locally sourced materials

For sale in St John’s Wood: top three

On the market now, we’ve found apartments with great natural light and spacious entertainemnt areas in St John’s Wood

Camden homes among hardest hit as London asking prices record biggest fall of the decade

Asking prices for homes in Camden have fallen an average of seven per cent in past month.

St John’s Wood area guide: Beautiful homes and top shops, cafes, restaurants and schools

Your guide to all the things to do in St John’s Wood, including the best shops, cafes, restaurants and schools.

The top gardening books to give you ideas and inspiration as autumn sets in

As the weather cools down, you can warm up indoors with a crop of new gardening books to inspire you.

Acclaimed designer Tom Dixon to relocate headquarters to King’s Cross

British designer Tom Dixon is relocating his studio, showroom and cafe from Portobello Dock to the city’s King’s Cross district, as the UK capital’s creative scene continues to move east.

Let far away places inspire your decor

Holidays may be just a memory but take inspiration from your favourite destination for your decor and you’ll enjoy that vacation vibe all year round.

For sale in Golders Green: top three

On the market now, we’ve found apartments with great views and a spacious newly refurbished family home in Golders Green

Grand Designs couple save £400k by designing and project managing the build of their Muswell Hill home

We’ve seen all sorts of things being built on Grand Designs, from a sliding house on railway tracks, to a home made of wood that is 100 per cent sustainable.

Open House celebrates 25th anniversary this weekend

Need an excuse to get out of the house this weekend? Give into curiosity and enjoy a rare chance to snoop around Camden’s famous residences, as well as local architectural hidden gems as part of Open House London.

The weirdest house hunting stories

From telepathically communicating with animals, to life-sized manikins in bathrooms, and tenants going at it in the bedroom Propertymark reveal the strangest property viewing stories.

Golders Green area guide: A world food scene, the park, top schools and restaurants

Your guide for the best things to see and do in Golders Green, including a melting pot of international cuisine featuring the most impressive restaurants, shops and delis and table topping schools, as well as our guide on the best streets to live.

How to add extra appeal to your home

The property market can be tricky to read, so if you’re thinking of putting your home up for sale, either now or in the future, how do you know how “saleable” it’s likely to be?

What to consider before changing your boiler

If you’re thinking of installing a new boiler, take a minute to read our handy advice first

Brexit is not affecting Britons’ decision to buy and sell, according to new research

When the country voted to leave the European Union, many feared the fallout from Brexit would have a negative effect on the consumer market, including property purchases.

Work begins on new ‘partly below-ground’ Hampstead house

Construction began last week on a partly below-ground 278m² house in Hampstead, with plans to feature a basement gym and cinema room.

Multigenerational living on the increase among UK families

Multigenerational households are on the increase in the UK due to a rise in young adults still living with their parents.

Top tips for buying a second property abroad

Thinking of buying a property abroad? Our guide helps you take that 
first step towards owning your own perfect place in the sun

Little birds flying the nest? Pack them off to uni in style with our top tips

Top interiors tips for sending your kids off to university in style this September

Darling Dahlias

Going strong into autumn, these hungry plants will still need regular feeding and watering.

Aston Chase demand reform of Stamp Duty to reinvigorate London property market

A report by high-end, inner London estate agent, Aston Chase, has called for urgent reform to Stamp Duty and Council Taxes

Mayor Sadiq Khan announces draft Housing Strategy for London

The mayor has pledged devolution of Stamp Duty, £250m for land acquisition and higher council tax on empty homes

Stand out to blend in

There’s a delicate balance to be struck between new and old when it comes to transforming Hampstead’s period homes. Here’s how architects Finkernagel Ross get the balance right.

King’s Cross area guide: Harry Potter, restaurants, shops and the station

Your guide to all the things to do in King’s Cross, including the best shops, cafes, pubs and schools. PLUS our guide to property in N1C

For sale/rent in Kings Cross: top three

On the market now, we’ve found apartments in the St Pancras Station Hotel, a converted warehouse and a modern apartment in King’s Cross

Shop of the month: Posh Totty Designs

Posh Totty have set up shop in Camden Passage, bringing all things Scandi to north London with a touch of class

Hackney architects to star on silver screen tonight

Bradley Van Der Straeten Architects to appear alongside Alan Titchmarsh in Love Your Home and Garden

HASA Architects bring a disused glasshouse back into use in Highgate

The derelict glasshouse at Highgate Bowl is now a fully functional event space for a future Mr and Mrs to announce their big day

Comment: knock, knock, knockin’ on London’s door

If London doesn’t start listening to its young people, they’ll go knocking on the doors of Bristol, Manchester and Leeds instead

The house that time forgot

A mint blue bathroom suite, lots of lace doilies and oodles of potential on offer in this £2 million Muswell Hill home

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter

2017 © Archant Community Media Ltd

Terms and conditions | Cookie policy | Jobs at Archant