Berkeley suggests 1% new-build cap in call for ‘urgent’ stamp duty reform
Housebuilder Berkeley has added its voice to the calls for stamp duty reform, with suggestions for targeted support for new-build buyers.
In its trading update, the firm said “urgent reform” to stamp duty was needed for the government to meet its target of 300,000 new homes per year. Berkeley said the current stamp duty regime was introduced when interest rates were 0.25% and what was a “manageable frictional cost” had become a “binding constraint” now that rates were back to a normal level.
Berkeley added: “Far more tax revenue is being lost through depressed activity than is being gained through stamp duty land tax on new-build homes as set out by HMRC’s own assessment. The Office for Budget Responsibility has historically estimated that for every 1% cut in stamp duty land tax, transactions may increase by up to 6%.”
The firm proposed “targeted intervention” for the new-build sector in the form of a 1% stamp duty cap for first-time buyers and downsizers and the removal of the 5% investor surcharge.
Collectively, it said this would support people buying their first home, free up more family homes and provide more homes for rent.
“Increasing transactions of all kinds will facilitate significantly higher rates of housing delivery of all tenures, including the critical affordable housing that is delivered alongside new private homes, and that would otherwise not come forward,” Berkeley added.
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Buyers may hold on until after the Autumn Budget
Berkeley said it would continue to operate within its four-year £1.4bn pre-tax profit plan and fluctuations would be driven by market demand.
It noted that some buyers might delay transactions until after the Autumn Budget and once election uncertainty fades.
“At this stage, we anticipate pre-tax profits to be slightly weighted towards the first half of the current financial year, subject to the timing of completions,” it said.
Berkeley said the Middle East conflict and political change in the UK had impacted the housing market, but it was still receiving “good and stable levels of enquiries”, suggesting that people who were not yet ready to move were “more cautious to commit”.
While the Prime Minister has firmly ruled out a change to the tax in the upcoming Autumn Budget, Bellway, Yorkshire Building Society, Rathbones and Family Building Society have all made a case for why they believe stamp duty should be reformed.
