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Rics demands stamp duty reform

Tuesday, 1 July 2008 12:25 AM

The Royal Institution of Chartered Surveyors (Rics) has called on the government to create a fairer stamp duty regime for the property market.

Proposing a system it argues will benefit 99 percent of home buyers, Rics called on the government to find a way of implementing the policy, which will provide a boost to the economy and the faltering housing market.

Key to the proposals is the abolition of the existing slab tax system, replacing it with a two tier marginal tax system.

Under the Rics system, no one will pay stamp duty on the first £150,000 of a house price.

Above this value a 2.5 percent marginal rate would be charged on every pound up to £250,000, with a five percent marginal rate applying to every pound thereafter.

"After having mortgages pulled from beneath their feet from lenders facing the full brunt of the credit crunch, consumers are looking to the government for help," said Rics director of external affairs, Gillian Charlesworth.

"HM Treasury needs to find a way to implement this policy or, if they can¿t do this imminently, to introduce a stamp duty holiday that will get the market moving."

Stamp duty land tax is currently charged at one percent of the full sale price of properties worth between £125,000 and £250,000, rising to three percent on the full cost of homes between £250,000 and £500,000.

Four percent is charged on homes worth more than £500,000.

Residential stamp duty revenue has more than tripled since 1999/2000, according to Rics, increasing from £4.6 billion in 2005/06 to £6.45 billion in 2006/07 alone.

Initially, the proposal will reduce government revenue by up to 24 percent, but given the 40 per cent rise in stamp duty revenue in recent years, Rics argues this is just.

"With transaction levels plummeting first time buyers have been hardest hit, seeing their home ownership dreams evaporate," added Ms Charlesworth.

"With long-term house price rises outstripping wage inflation, food and fuel bills rising, and tighter lending criteria being applied by mortgage companies, the residential property market is becoming more inaccessible."

Chris O'Toole

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