New research shows that stamp duty reforms have slowed the property market, amid calls for the tax to be reviewed in the coming Autumn Statement.
The analyses, carried by global advisory firm Oxford Economics, addressed the impact of stamp duty reforms that were put in place by former Chancellor George Osborne, which saw the introduction of a new tiered taxation system for properties across different price brackets.
The research revealed that Osborne’s tax reforms contributed just £330 million in funds to the Exchequer since their announcement in December 2014 - £370 million less than the Government’s target of £700 million.
Oxford Economics suggests that higher stamp duty levies have led to a decline in the number of properties for sale, and have resulted in the UK economy losing nearly £1 billion, as more people put a halt on selling their home and opted to renovate instead.
Although they were designed to help 98% of property buyers, the new reforms thwarted the sales of properties valued at more than £1 million, says the think tank; with figures showing a decline of 1,950 in sales of this property group, aside from an estimated loss of 14,000 jobs.
Further calculations indicate that increasing stamp duty by just 1% on homes worth between £1 million and £2 million resulted in an 8% decline in transactions, a much higher percentage than the 2.8% reduction estimated by the Office for Budge Responsibility.
The research has been accompanied with calls from MPs, housebuilders, building societies and estate agencies for the Government to annul the current stamp duty reforms and re-embrace the old taxation system in the coming Autumn Statement.
In a pledge to end Osborne's tax reforms, Conservative chairman of the Treasury committee, Jacob Rees-Mogg, said:
“Taxation ought to be about raising the revenue governments need – not the politics of envy. Punitive stamp duty rates seem, unsurprisingly, to have failed, so ought to be normalised at sharply lower levels.”
The news comes before Chancellor Philip Hammonds first Autumn Statement, due to be announced Wednesday 23rd , where he is expected to discuss house prices as well as the Government’s plan to tackle the vast undersupply of homes in the UK.