The Chancellor unveils his Budget tomorrow.
Much has already been leaked about the prospect of dropping the 50p higher rate of tax, funding further road infrastructure and, controversially if the Liberal Democrats get their way, a ‘mansion tax’ and a ‘tycoon tax’.
But mansion taxes aside, little else has been said of what George Osborne intends to do for the property market except to avoid the possibility of extending the much welcomed stamp duty holiday past March 23rd. More’s the shame.
The UK property market is the lifeblood of the economy. Feeling good about the value of your home and the rising equity within it is a positive psychological fillip. The ‘money’ that Englishmen (and women) earn from their metaphoric castles is spent in the wider economy and invested in small businesses which in turn employ people and pay taxes.
That is why Mr Osborne should focus his mind primarily on boosting the property market. And we’re delighted to do the hard thinking for him in setting out what he needs to do when he stands up at the despatch box in the Commons at 12.30pm tomorrow.
1. Stamp Duty
Traditionally paid by the buyer, it should be announced that stamp duty will from here on be paid by the seller. Such a shift in responsibility will allow beleaguered buyers to buy more easily and for sellers to simply utilise their equity to foot the Treasury’s bill. Stamp Duty should be changed to a flat 2% on all sale prices rather than it being maintained as a penal, escalating levy concentrated on the South East with its higher house prices.
Banks don’t want to lend to home buyers any more. The cheek of it notwithstanding, there are more mortgage products available than at the height of the crunch. But underwriting criteria is harsh and many banks are missing Government imposed lending targets despite the irony of the tax payer customer being the one that bailed them out. The solution is for the Government to set up a ‘Treasury Bank’ and lend directly to the home buyer (and small business for that matter) at competitive rates and with a sensible approach to risk. A return would be made and would be of far greater benefit than the current paper loss on share purchase as the result of the bail outs done in the public’s name four years ago.
3. House Builders
Not enough houses are being built. The new Localism Act will free traditional planning shackles but the industry itself needs further help. We propose tax relief on house builder profits IF they meet volume targets of fresh homes constructed in a given year. Incentives work.
4. Bank Tax
And so do penalties. Much has been said of imposing a bank tax, just for the sake of it. Given their rather arrogant behaviour of late, incentives may not work so well and a ‘for the sake of it’ tax is unfair. Arguably, they have enough money in any case. Much of it yours. And so we suggest a bank tax on those that have been bailed out with public funds (RBS, Lloyds etc) IF a certain level of mortgage (and small business) lending fails to be met. Set a target and ‘fine’ them if they miss it. A lot. That should stimulate them and their competitors into parting with much needed cash.
One hopes that under such a cosh, no tax monies would result. But if the exchequer were to gain from this initiative, that gain should be ring fenced and ploughed directly into shared ownership housing schemes providing much needed affordable homes.
5. Estate Agents
As a further boost to the home mover, estate agency fees should be capped at £1000.00. Anything higher is unjustifiable and the pounds saved would be well spent elsewhere, again boosting UK Plc in many respects.
Ok, so we’re kidding about our fifth suggestion. Much as we detest the fees that High Street agents charge it should still be a matter of free markets. If someone wants to pay thousands of pounds to advertise their home on Rightmove, then that’s up to them. But we’ll carry on charging a tenth of the typical estate agents’ selling fee.
But our other suggestions are very serious indeed. Just humble, uneducated estate agents we may be but we think we might just have something here.
George, are you listening? Tomorrow will tell.