According to the FT this morning:
UK chancellor Philip Hammond is drawing up plans to help first-time buyers in his Budget later this month, in an attempt to show the government is getting to grips with the housing crisis.
The chancellor is preparing a stamp duty cut for first-time buyers as a signal that the Conservative party understands the widespread resentment felt by those locked out of the housing market because of high prices, according to government aides.
It's staggering that this trick, tried so many times before, might be tried again. When will the Treasury realise that all that happens when such a move is made is that the house price goes up by the value of the stamp duty saved, exacerbating the whole problem?
This has been tried time after time after time. And the lesson has yet to be learned that the housing problem is not that it's overtaxed, but undertaxed, and that is why prices are too high.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Funny how ‘free market’ principles disappear when it is convenient. The only solution to a shortage of accommodation is to create more of it and make what is currently underutilised available.
The Conservative government has no incentive to do this because it can win majorities in the Commons with a minority of the already privileged. Tinkering with price/tax structures the way Hammond is alleged to be proposing reinforces rather than undermines the present status quo.
Quelle surprise.
As someone who is looking to buy a house in London with my partner within the next year, this worries me. At the moment London is seeing a slowing down of house prices, with some estate agents saying that because of this sellers are taking up to 20% below the asking price. On face value dropping the stamp duty sounds like a great idea, but as I understand it, without significantly increasing housing stock, you only increase demand without increasing supply which generally increases house prices. I’m concerned that as a result me and my partner will be priced out of areas we are considering now. I would be interested if you have any information I could further read into this issue. Also at the weekend I managed to go to a Labour economics conference held in Lincoln. I was visiting the city as its where all my family live and so decided to pop along to it (my family couldn’t understand for the life of them why I would want to spend 5 hours sat in lecture halls on a Saturday). One interesting thing which came out of the conference is Land value tax. I was chatting to one of the ladies who was promoting it and on a whole it seemed like quite a good idea. I thought that getting rid of council taxes et al. and only have a yearly tax based on the value of the land was an interesting way of making sure land doesn’t get bought up for speculative purposes. However, we didn’t entirely agree as she was talking about getting rid of loads of different taxes such as income tax (she claimed that no earned work should be taxed) and instead be replaced with progressive land value tax which I wasn’t in favour of. I would be interested to know your thoughts on LVT.
Finally, at the conference there was quite an interesting presentation by a investigative journalist from the private eye, they have produce a website which lists all the land and who owns it. If you aren’t already aware of this and are interested, I would recommend having a look….. http://www.private-eye.co.uk/registry
I bet you were talking to Carol Wilcox….
I will do another blog on stamp duty shortly
Yes I believe it was Carol Wilcox. To be fair we didn’t chat for long enough and I haven’t read enough about how LVT would work to have much of an informed opinion on it yet.
Land Value Tax got a quiet and unassuming mention in Labour manifesto at the last election. It would nevertheless potentially be one of the most radical and progressive policies that a Labour government could ever hope to implement. I do hope it will not be dropped in the next manifesto to get Daily Mail ‘Garden Tax bombshell’ brigade off their backs.
You can be sure that it won’t be. John McDonnell is a long-term member of the Labour Land Campaign.
Take a look at our website, Joe, http://www.labourland.org/. By the way, I would only advocate reducing the VAT rate (although we’d be able to scrap it completely if/when we left EU but I’d still have a consumption – of unrecylable natural resources – tax though) and abolishing the standard rate of income tax – higher wages and unearned income are just economic rent. NICs should be hypothecated for the state pension, as pensions are just deferred wages.
Thank you very much Carol, I bought the book you had there which I haven’t had chance to read but fully intend to do so!
[…] I have already noted this morning, rumours are circulating that Philip Hammond is considering a stamp duty cut for first […]
Yes cutting taxes on property just means that money instead of going to the treasury goes to the banks. Who lobbied for this one?
I thought this the other week when I saw this Telegraph article: https://t.co/rf1gVkpWIQ
It will only inflate house prices.
… and of course it’s backed up with a report by the Adam Smith Institute. *rolls eyes*
I highly doubt that Stamp Duty is reducing job mobility like they claim, but I can imagine the actual cost of housing is.
Supply-side policies & LVT needed.
It’s better to scrap Stamp Duty and replace with LVT, along with all other property taxes: Council Tax, Business Rates, Section 106 Agreements, Community Infrastructure Levy, ATED. See https://www.ft.com/content/d8de4870-c3d3-11e7-a1d2-6786f39ef675.
Thank you Carol.
They did this in Australia in 2009 with the unstated purpose of sustaining house prices and called it The First Home Buyers Grant.
Steve Keen nailed it one by renaming it ‘The First Home Vendors Grant’.
Enough said.