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Stamp Duty Reform – Scotland Leads The Way?

20th October 2014


Having spent 20 years on the front line of the Mortgage and Property Industry, the one item that keeps coming back year after year at budget time is the question of Stamp Duty Reform. The main issue has always been not that it is paid at all, but that the way it is calculated in a “slab”, which leads to strange markets around the boundaries of prices where it changes; buying a property for £505,000 is very rare.

I have long since thought that a fairer version would be to work out the tax much like income tax, where you only pay the rate on the proportion of the loan that is in that boundary. This could then enable higher levels to be charged on residual amounts. However, after a couple of conversations with those that could do something about it, it seemed that changing the status quo was not an option, especially as the Revenue were starting to see more receipts as prices rose.

Now Scotland has taken a lead on reforming Stamp Duty, it raises more questions. Firstly, why can’t we do something similar in the UK? It seems a much better way of setting out the tax itself and will avoid bunching at certain levels and a more realistic market.

The key, however, is to get the levels right in order to assist the bottom end of the market and first time buyers, but also not unduly penalise higher priced purchasers which could stall the market further. Perhaps Scotland has gone slightly too far and there could be more bandings rather than a sudden leap to 10% that leaves a purchaser of a £500,000 property having to find an additional £12,300 in tax.

However, the most important question is that if Scotland has access to its own Stamp Duty receipts, why not London or other large areas? London could benefit immensely from more fiscal power which could help more homes to be built and alleviate some of the housing issues leading to higher prices.

London is a world-leading city, it should be allowed to compete effectively and control it’s finances. After all, no matter what is said, a strong London and the investment it brings is good for the UK as a whole.

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Andrew Montlake

About Monty

Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008", "Best Press Spokesperson" in 2011 and is the current holder of the British Mortgage Awards “Best Marketeer” title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.