The British government will not change stamp duty on property purchases in the upcoming budget, Prime Minister Andy Burnham has said. He has dismissed reports over the weekend that the tax could be revised or scrapped.
“That won't happen in the next budget“, Burnham told Sky News.
The decision comes amid concerns that continued speculation about a possible reform could block activity in the housing market. A similar situation has already been observed when former Chancellor of the Exchequer Rachel Reeves discussed changes to property tax.
According to Sky News, the uncertainty led to a freeze in the market for several months until a final decision was announced. The risk of buyers and sellers postponing their transactions again is one of the reasons why the government has ruled out changes in the short term.
Annual tax based on property value proposed
However, the debate over broader property tax reform in the UK continues. Burnham has already expressed support for the proposals of the national Fairer Share campaign, which insists that the local Council Tax and stamp duty on property purchases be replaced by a proportional annual property tax.
The proposed system foresees that owners pay 0.48% of the value of the property annually. For a home worth 300,000 British pounds, this would mean an annual tax of 1,440 pounds.
According to the campaign organizers, about 77% of households would be in a more favorable position under such a system. For owners whose debts are increasing, it is proposed that the increase be limited to the point of sale of the property.
A petition in support of the reform has already collected 100,000 signatures. The proposal would mean a significant change from the current model, in which the main tax burden arises at the moment of purchase of the property.
Stamp duty restricts deals
Property portal Zoopla warned that stamp duty is increasingly deterring owners from moving.
The company's chief executive Richard Donnell described the tax as a serious obstacle to activity in the housing market. According to him, in southern England the cost of buying often reaches five figures.
Around six out of ten property transactions in the UK are carried out by people who already own a home. When the cost of moving becomes too high, some of these deals fall through, particularly in areas with low price growth.
The problem is most pronounced in areas with expensive properties, where stamp duty liabilities can reach tens of thousands of pounds.
The government has not yet specified whether it will consider a larger-scale reform of property taxation after the next budget.