Taxation remains a barrier to property transactions, says Propertymark
Property transactions are an essential aspect of the real estate industry, driving economic growth and providing individuals with the opportunity to invest in their future. However, according to Propertymark, the UK’s leading professional body for property agents, taxation continues to be a significant barrier to these transactions.
In a recent report, Propertymark highlighted the impact of taxation on the property market and called for urgent reform to address the issue. The report, titled “Taxing Property: A Barrier to Home Ownership and Investment”, revealed that the current tax system is hindering property transactions and deterring potential buyers and investors.
One of the major concerns raised by Propertymark is the high rate of Stamp Duty Land Tax (SDLT) on residential properties. SDLT is a tax paid by buyers on properties worth over £125,000, with the rate increasing for properties over £500,000. This tax has been a significant deterrent for first-time buyers and those looking to move up the property ladder.
According to Propertymark’s report, the average SDLT paid by a first-time buyer in the UK is £2,300, which is a considerable amount for someone trying to get onto the property ladder. This tax burden has only increased in recent years, with the introduction of the 3% surcharge on second homes and buy-to-let properties. As a result, many potential buyers are struggling to save enough for a deposit and cover the additional cost of SDLT.
The impact of high taxation is not limited to residential properties; it also affects the commercial property market. The report highlighted that the current business rates system is outdated and not reflective of the true value of properties. This has led to many businesses struggling to keep up with their tax payments, hindering their growth and expansion plans.
Furthermore, Propertymark’s report also highlighted the impact of Capital Gains Tax (CGT) on property transactions. CGT is a tax paid on the profit made from selling a property that is not the owner’s main residence. The current rate of CGT is 28%, which is significantly higher than the rate for other assets, such as stocks and shares. This has discouraged many property owners from selling their properties, leading to a shortage of available properties in the market.
The impact of high taxation on property transactions is not just limited to buyers and investors; it also affects the overall economy. The report estimated that the current tax system is reducing property transactions by 10%, resulting in a loss of £1 billion in tax revenue for the government. This loss of revenue could be used to fund essential public services and infrastructure projects, benefiting the entire country.
In light of these findings, Propertymark is calling for urgent reform of the current tax system to remove the barriers to property transactions. The organization is proposing a reduction in SDLT rates, especially for first-time buyers, to make it easier for them to get onto the property ladder. They are also advocating for a review of the business rates system to make it fairer for businesses and encourage growth.
Propertymark is also calling for a reform of CGT to bring it in line with other assets and encourage property owners to sell their properties. This would increase the supply of properties in the market, providing more options for buyers and stimulating economic activity.
In addition to these proposals, Propertymark is also urging the government to consider other measures, such as a temporary stamp duty holiday, to boost property transactions and support the economy during these challenging times.
In conclusion, Propertymark’s report highlights the significant impact of taxation on property transactions and the need for urgent reform. The current tax system is a barrier to home ownership and investment, hindering economic growth and depriving the government of much-needed tax revenue. It is time for the government to take action and address these issues to support the property market and the overall economy.