Should the UK scrap Stamp Duty?

March 19, 2021

The Stamp Duty holiday introduced in July 2020 as an attempt to avoid a pandemic-triggered property market crash was wildly successful in terms of keeping the market moving. The extension of the holiday to the end of June 2021, which should allow almost all of the 100,000 or so buyers who were at risk of missing the original deadline to complete in time, has also been well received. 

With all this enthusiasm for Stamp Duty relief flooding the market, we thought it was worth looking at the longer-term implications of the tax and questioning what might happen if it were to be scrapped altogether. 

Matt Harper-Penman, Group Director at Fabrik Property Group, shares his thoughts:

Is the current system of Stamp Duty a fair one?

“Taxes and levies in all industries work against the principles of a free market – a free market meaning that someone pays what they think something is worth, while the seller sells for what they think it’s worth. It’s a fair deal for both sides.

“For our economy to prosper as much as it could, we need to encourage a free market as much as possible. Stamp Duty Land Tax is a way of manipulating the market, in favour of how the tax law has been written.

“London is the clear example of this. Property prices in the millions mean that buyers must pay eye-watering levels of Stamp Duty. Those buying a home costing between £925,000 and £1.5 million will incur a rate of 10%, while those buying properties worth over £1.5 million will have to pay 12%. When you add in the additional 3% that investors and second home buyers have to pay, those rates jump to 13% and 15% respectively. 

“That’s a ridiculously high rate of tax. It’s so high that it actively discourages people from buying the homes they would otherwise purchase. Punishing people financially for being willing to enter into larger property transactions isn’t a fair approach. It detracts from the entire free market concept.”

Is scrapping Stamp Duty the answer?

“No, I don’t think that scrapping Stamp Duty entirely is the right approach. We need taxes in place in order that the government can invest in essential resources – schools, the NHS, transport and infrastructure projects and a whole host of other services. 

“However, that’s not to say that we can’t refine the current system. It doesn’t make sense to discourage the wealthiest members of society from living in the UK by hitting them with punitive property taxes like this. When you compare the taxation rates in the UK with locations such as Dubai, for example, it feels increasingly hard to justify why wealthy families and investors should remain here. 

“Clearly, this isn’t a great situation for our country. We want to bring revenue into the country and retain it, not push those with wealth away. So, no, I don’t believe it would be a good idea to get rid of Stamp Duty entirely. However, I do believe the system needs a radical rethink in order to remove the current lack of fairness.”

To find out more about investing in UK property, call Fabrik Invest on 020 8175 9891, email enquiries@fabrikinvest.com or visit www.fabrikinvest.com.

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Wayne Venter

International Business Development Manager

Wayne has been in the property industry for over 17 years. He started out selling residential properties in the northern suburbs of Sandton, South Africa, for one of the bigger real estate brands, before moving to a boutique, Johannesburg-based property developer. He worked at a senior level, specialising in residential developments on the north coast of KZN and various other areas of Northern Johannesburg.

Wayne moved to selling luxury, free standing homes and apartments in Sandton, Johannesburg in 2006, having joined the Country’s leading real estate brand and within six months was leading the team. In 2008, he began to focus exclusively on the luxury apartments in central Sandton, priced from approximately R2 million to R60 million. Over the years, he has also added commercial property sales and rentals to his repertoire, as well as building his own investment property portfolio between 2011 and 2018.

By 2018, realising where the South African property market was headed, he sold out of his investment property portfolio to de-risk and went looking for a real estate company to buy into. South Africa’s property market was extremely volatile at that time, so Wayne took the initiative and moved to London to work in property in the UK.

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Edward Snell

Senior Property Consultant

I live in Spanish countryside with my wife and our 11 rescue dogs.

Originally from Bedford, I have two sons, two step children & 6 grandchildren.

I have a keen interest in property investment and over the years have built up a personal portfolio for the purposes of rental income and capital growth.

I have over 20 years’ experience in property investment, both in the UK & overseas.

My other interests include animal welfare, football, motorsports, travel and music

My personality is of an even temperament and I enjoy the cut and thrust of doing deals.
I am happy and successful in what I do & take great pleasure in providing my clients with successful outcomes.

I’m a good team player but work well as an individual.

Daniel Harburn

Property Sales Consultant

Daniel had a passion for property from a young age so he began his working life by undertaking a plumbing apprenticeship for a large well known UK developer to pursue a career in construction. After qualifying he soon realised that building relationships was a preferred skill of his due to his loyal and trusting nature.

From then on Daniel launched his career in sales where he worked his way to to a high performing sales person at a creative media company. Part of Daniels success in accumulating clients over the last 10 years is put down to his diligence in customer experience.

Daniel has a keen interest in golf and also in keeping himself fit which is essential as he and his fiancé have 4 year old twins, Jacob and Sofia who keep them both on their toes.

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