Berkeley urges Govt to reduce property tax – Mortgage Strategy

UK ‌housebuilder Berkeley Group is urging the government to cut property taxes as cautious buyers keep housing demand subdued in the run-up to October’s budget.

The housebuilder has demanded ​reforms to stamp duty, a property purchase tax, including a 1% cap ​for first-time buyers and downsizers, and the removal of a ⁠5% surcharge on investors.

In its latest trading statement to the City  Berkeley said to meet the Government’s target of 300,000 new homes per annum, and help address the cost-of-living crisis by making homes more affordable, the current stamp duty regime, that was introduced at a time when interest rates were 0.25%, required urgent reform.

“What was a manageable frictional cost when interest rates were at those unique and unsustainable levels, has become a binding constraint, now that interest rates have returned to more normal levels. Far more tax revenue is being lost through depressed activity than is being gained through SDLT on new build homes as set out by HMRC’s own assessment. The OBR has historically estimated that for every 1% cut in SDLT, transactions may increase by up to 6%.”

Accordingly, Berkeley has urged the Government to consider a targeted intervention to support the new build sector and  cap SDLT at 1% for First Time Buyers; cap SDLT for downsizers at 1%; and remove the 5% investor surcharge.

“Collectively, this supports people buying their first home, frees up more family homes, and provides 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,” the statement said.

To achieve a sustainable increase in housing supply, Berkeley fully supports the Government’s planning reforms in London; the priority now is implementation. The Homes for London package and the updated National Planning Policy Framework are clearly designed to reduce regulatory cost, speed up the system and get stalled sites into construction; essential pre-requisites to kick-start supply on brownfield sites.

Berkeley insisted it was making good progress advancing its sites through this reformed planning system, to secure deliverable and viable planning consents.  “However, we still need to see more consistency, and the pro-development stance seen in policy making also adopted in decision making”.

Fellow housebuilders Bellway and Barratt Redrow also called recently for lower stamp duty and government help for first-time buyers.