The UK property market stands at a critical juncture. With the housing sector facing significant headwinds and first-time buyers battling unprecedented challenges in entering the market, the sector needs reform to ensure the housing market delivers for citizens and the broader economy.
As the chancellor prepares to deliver what many anticipate to be a painful Budget, I think there's a transformative opportunity being overlooked: fundamental reform of our property taxation system.
The case for reform
My proposal is simple yet potentially revolutionary: transfer stamp duty liability from buyers to sellers.
This isn't just about making life easier for property buyers, it's about stimulating economic growth and boosting the housing market at a time when our economy desperately needs it.
As someone who has sold more than £5bn worth of property throughout my career, I've witnessed firsthand how our current system creates unnecessary barriers to market entry and mobility.
Under the current system, buyers are required to raise additional capital to cover stamp duty on top of their deposit and mortgage.
This creates a significant barrier to entry, particularly for first-time buyers and those looking to move up the property ladder.
By shifting this burden to sellers, who can pay the taxation from their sale proceeds, we could increase market liquidity almost immediately.
The global context
The urgency of this reform becomes clearer when we consider the broader economic landscape.
We're seeing an unprecedented movement of wealth, with many ultra-high-net-worth individuals exploring alternative residency options in tax-friendly countries such as Dubai, the Caribbean and Portugal.
While these jurisdictions may seem attractive now, it would be naive to think they will remain tax-free indefinitely. The UAE's tax-free status, in particular, is likely to face future challenges.
The UK's enduring appeal lies in its stability, world-class education system, and overall quality of life.
My clients repeatedly tell me they don't object to paying tax. Their concern is with the quantum. This is where our property tax reform could make a crucial difference in retaining wealth creators.
Economic ripple effects
The UK, particularly London, remains a 'rainmaker economy'. When wealthy individuals base themselves here, the economic benefits ripple far beyond property transactions. They invest in businesses, employ local services, and contribute to our hospitality and retail sectors.
Recent data supports this view, with super-prime transactions above £10mn in London increased by 9.1 per cent in 2023, with the capital's most expensive house selling for £73.2mn.
The timing for reform therefore couldn't be more critical.
Traditionally, property performs better under a Labour administration, yet there's a risk that without proper reform, Keir Starmer's government could be the one to buck this trend. The property industry needs incentives, not penalties, to maintain its vital contribution to the UK economy.
A universal benefit
The simplicity of transferring stamp duty liability from buyers to sellers benefits all market participants.
First-time buyers would find it easier to step onto the property ladder.
Home-movers would find it easier to progress up the ladder.
