Brokers sceptical of Cleverly’s stamp duty pledge – Mortgage Strategy

Mortgage brokers have shared their scepticism over James Cleverly’s pledge to axe stamp duty if he were to become prime minister in the future.
Writing in the Telegraph, the Conservative leadership contender promised to scrap the “perverse” tax.
He wrote: “We were right to cut stamp duty for first-time buyers.“But I want our ambition to be to abolish stamp duty for residential properties completely.
“It’s a bad tax that is stopping too many people getting on the housing ladder.“It disincentivises housing transactions, stopping older people from downsizing and young families from upsizing, and slows the building of new homes.”
Trinity Financial’s Aaron Strutt says: “Scrapping stamp duty is a lovely idea but in reality it generates too much money for any government to simply remove it.
“Last year, stamp duty pulled in over £15bn in tax and this money would need to come from somewhere or be cut from other areas of public spending.
“It would be a nicer idea for stamp duty to be reformed or if incentives were introduced to temp older people to downsize to free up properties.
“If it was scrapped, then house prices may well increase and also overseas buyers probably would be tempted to snap up more investment properties.”
It is a view shared by London Money director Martin Stewart.
He says: “I am sure the five years between now and when this policy may come in will fly by.
“In the meantime we can look forward to hearing how James Cleverly plans to plug the hole in public finances that he’ll be creating by abolishing stamp duty.
“The policy would, in reality, only make house prices even more unobtainable for many than they already are.”
Private Finance technical director Chris Sykes says it is not a realistic policy.
He says: “The tax brings in a huge amount of revenue for the government“However, it could be completely overhauled.
“There could be less stamp duty for those downsizing, giving more incentive to free up family homes that are currently occupied by older couples and single people.
“It could be regionalised, for example, so someone buying a ‘normal home’ in certain postcodes don’t pay at all or pay only a small amount, while those buying homes that are larger than their needs pay for it.
“There are plenty of things that could be done to stamp duty to make it a less-restrictive tax.
“Could it push up house prices? Possibly.
“We all saw what happened in the stamp duty holiday.
“However, ‘holiday’ brings urgency and panic, whereas complete open-ended reforms or abolishment wouldn’t.”