Stamp duty rethink urged to revive property market

Jun 25 2008 by David Bartlett, Liverpool Daily Post

Homes for sale in an Estate Agent's window _320

THE chairman of the Northwest Development Agency has called on the Government to review stamp duty to help reinvigorate the property market.

Bryan Gray also states, in a letter to the Secretary of State for Business John Hutton, that the Government should think about scrapping its decision to raise taxes on empty commercial premises.

Mr Gray’s call came as it was revealed yesterday that the num-ber of mortgages approved for home purchases across the UK had hit a record low in May.

The British Bankers’ Association said members had approved just 27,968 mortgages for pur-chases over the month, a fall of 20% since April and 56% below the figure for the period last year.

Yesterday, it was revealed that Chancellor Alistair Darling was calling a halt to inflated mortgage fees of up to £2,500, in a bid to help the property market.

Mr Gray’s letter, sent in his role as chairman of regional develop-ment agencies, sets out how the English regions are coping with the current economic downturn.

He tells Mr Hutton the condi-tions are the most “challenging economic circumstances regionally and nationally since RDAs (regional development agencies) were set up 10 years ago.”

He warns the development agencies expect job losses to start to increase in the second half of 2008.

Mr Gray says he is aware that Mr Darling is “actively thinking how to reinvigor-ate the property market.”

“Our suggestion would be to review the decision to raise property taxes from empty commercial premises,” he writes.

“Speculative build has virtually disappeared in England, partly as a result of this decision. As there is little ‘tax take’ to be lost from this decision, we believe it would help stimulate recovery in confidence in the property market. Additionally, it might be instructive to review the impact of the level and structure of stamp duty on residential properties coming to market.”

Currently, no duty is paid on homes bought for up to £125,000, 1% is paid on those between £125,000 and £250,000, 3% between £250,000 and £500,000, and 4% for more than £500,000.

In April, Empty Property Relief for vacant commercial and industrial properties came to an end.

Owners used to get 100% rate relief when buildings are unoccupied. Shop and office owners used to obtain 100% relief for the first three months and 50% relief after that.

However, from April, industrial property owners get 100% relief for the first six months only.

The changes were hugely unpopular when introduced.

davidbartlett@dailypost.co.uk