Blame stamp duty holidays for lost taxes, not rising house prices – think tank
An INFLUENT think tank questioned the government’s policy of sacrificing billions of pounds in taxes to support the housing market.
The Resolution Foundation found that the onerous stamp duty holiday might have pushed up house prices, but prices would still have gone up, without the tax break for homebuyers.
Last year, in response to the pandemic, the government raised the threshold at which buyers must pay stamp duty.
In England this amount was increased to £ 500,000, while in Scotland and Wales the new threshold was £ 250,000.
But the hike, which can save buyers thousands of pounds, has been blamed for a huge increase in house prices as buyers rushed to take advantage of the tax break.
Earlier this week, the Office for National Statistics revealed that the average UK house price rose 13.2% between June 2020 and June 2021.
However, the Resolution Foundation said its analysis shows house prices have risen in Germany, the United States, Canada, Australia and France at a similar or even faster pace than the United Kingdom.
He said low interest rates, higher savings rates, and desires to leave cities have led to a boom in the real estate market.
The foundation also analyzed the fifth of local communities where savings from stamp holiday were negligible or non-existent. Here, real estate prices rose 13 percent.
In contrast, the fifth of the local communities where buyers saved the most saw only a 7% increase in house prices.
“The problem with the stamp duty holiday is not that it caused house prices to rise, but that a transaction and price boom almost certainly would have happened without it,” said Krishan Shah, researcher at the Resolution Foundation.
“This raises big questions about value for money, especially considering that politics in England and Northern Ireland alone are expected to cost around £ 4.4bn in lost tax revenue.
“We must also remember that whatever its drivers, the surge in house prices of the last year has widened the wealth gaps in our country and has taken many aspiring first-time buyers even further from realization. of their ambitions to own a home. ”