The UK Chancellor should consider abolishing the UK’s “punitive” stamp duty tax while the government needs to address and simplify the country’s complex planning laws, a report from a UK think tank said.
The Tax Payers Alliance (TPA) – which was formed in 2004 – has put together a report and recommendations for the reform of the UK’s housing market. It comes during what is widely considered to be a housing crisis and aims to benefit all Britons in need of a home, whatever the required tenure may be.
“The housing crisis has prompted the government to take a number of policy decisions aimed at making it easier for people to buy a home,” the TPA says as it introduces its report. “Together with policies implemented by local authorities, much has changed in property markets for owner- occupying buyers, landlords and tenants. These changes are not sufficient to tackle the housing crisis, whose underlying cause is planning policy restrictiveness.”
Specifically, the group claims that the recent increase in stamp duty for owners of more than one home, which penalises private buy-to-let landlords, should be abolished immediately. The reasoning behind that first recommendation is that while some first-time buyers may have an increased opportunity to purchase a home if fewer BTL landlords are in the market, private tenants will suffer due to an increased lack of supply which will also likely cause rents to rise.
“In summary, the additional homes surcharge complicates the tax system, is regressive, hinders labour mobility, is economically damaging and may not even raise much revenue,” the TPA said.
The second recommendation the TPA makes is for chancellor of the exchequer, Philip Hammond, to halve stamp duty taxes ahead of abolishing them completely. The TPA calls stamp duty a “disastrous, unfair and unnecessary tax which impedes labour mobility, misallocates housing stock and leads to lower incomes and higher unemployment than necessary.”
Meanwhile, it’s third recommendation and possibly the one that could be the most difficult to implement but with the furthest reaching impact, is to simply planning laws.
The UK’s planning system is renowned for its complexities and while the ability of local councils to ‘plan’ their villages, towns and cities, can be beneficial, it imposes a lack of standardisation on some issues which can make it difficult for people who submit plans to navigate. The TPA takes umbrage with the green belt in particular and urges the government to allow for more development in the regions where it is most needed.
“Pressure needs to be taken out of the housing market by freeing up land so that land with permission becomes less rare and therefore less expensive,” the TPA says in its report. “The first impact of this policy will be to increase the profits of development, by lowering the cost of land. This in turn will stimulate more housing supply which will then bring down housing costs. The way to do this is to declassify a small percentage of the vast green belt.”
The report has been widely publicised with the Association of Residential Letting Agents (ARLA) managing director David Cox supporting the need for more debate on a situation he agrees could affect tenants in particular.
“ARLA has been consistent in our view that increasing tax for landlords will increase rents and reduce property standards for tenants,” Mr. Cox said. “In a market place that is struggling to meet demand, the Government must do more to increase the supply of rental property and not continue to come up with measures that act as a disincentive for investment in the private rented sector.”
Strong, possibly even radical measures are likely required to help resolve the UK’s current housing crisis. However, with so much advice on offer and a new Government in place with Brexit to orchestrate, unfortunately, the necessary changes are unlikely to be forthcoming anytime soon.