Stamp Duty idea
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Err..I’ve made something like this suggestion to an interested party. Not sure if said interested party will run with it, which is understandable as I’m nobodies finance spokesperson at this point in time. Part of my idea is to alter stamp duty above a certain rate into something that it paid over a longer period of time and as you mention to be somewhat tax deductible as a means to altering the balance the tax base.
The money will go to developers and sellers anyway. It is gauranteed that people will bid as much as they can to buy a house. Anything that gives buyers more money will simply cause them to bid more, because all other bidders are going to bid more too.
The problem of high prices is caused by the fact there are people buying houses who don’t even want one, simply because they see the price going up very fast and they are worried they won’t be able to buy one in future. The solution is simple, just as the solution to high inflation is as simple as the government/ECB imposing high interest rates.
The state should set a target house price increase of say 2% a year and then reach that target through hiking capital gains tax or whatever it takes. It’d be easy to do, and would create a real market again, where demand for houses is no more and no less than people looking somewhere to live. And when real demand falls to sensible levels, so would house prices. In particular, young single people would be happy to share rented accomodation if that’s what they want instead of feeling forced to waste land on separate houses.
It should not be the intrinsic value of a habitation that attracts the Stamp Duty, rather the site value.
A property should be divided into two distinct sections -
1. The Site and
2. The House or other structure that has been erected on that site.
The value of the House should be the cost of re-instatement - for Insurance purposes. This should be a standard formula, designed by the Institute of Chartered Surveyors, and accepted as the basis for valuation.
No Stamp Duty or Tax of any form should be payable on this property, assuming it is the principal private residence (PPR) of the Owner.
In contradistinction, a Capital Gains Tax (CGT)might be paid on any increase in the site value. This is entirely equitable and should be introduced, immediately, by the Minister of Finance, if for no other reason than to steady the market, which is expecting some reduction in Stamp Duties.
Following on this, all fallow (empty) property; holiday houses; land not used for productive purposes etc… should be subjected to an Annual Property Tax APT).
Upon sale or swap, CGT should be payable, allowing for inflation and any outlays in improving the property. The APT, already paid, should be set off against the CGT liability.
Stamp Duty on property should be abolished immediately thereafter.
Ministers Cowen & McDowell, please note.
This is practical and equitable.
It might upset the developers in the FF Tent — but — so what?
They can afford it.