With the upcoming election, one of the major points on everyone’s tongues is the issue of housing. Labour have pledged to get rid of stamp duty land tax for first time buyers if they win the election.
When buying a home, should a Labour government be elected in, over the next three years, first time buyers will not have to pay stamp duty land tax on the property if it is valued under £300,000.
Stamp duty land tax is the tax that is paid, judged by a percentage gradient, on property purchases. By alleviating this tax for first time buyers, it is hoped that it will make getting the first step on the property ladder much easier.
This tax holiday has been proposed to last for three years, hopefully giving a boost to the housing market. Ed Miliband commented “There’s nothing more British than the dream of home ownership” (apart from the dream of a non-rainy Summer) but this is out of the reach of millions of young people across the UK.
Stamp duty land tax can be up to 12 per cent of the property price extra, but only on the most expensive of homes. On homes up to £125,000 however, no stamp duty land tax has to be paid, and then the next £125,000 increase in value is only taxed 2 per cent.
It is possible that this holiday will not have a huge effect on the purchases of many first buys by much in the grand scheme of things, but it will help a few save a few thousand pounds, which means a lot in an economy where saving a deposit is one of the most difficult obstacles to overcome when buying a home.
The way Labour have proposed they will be able to afford this is by cracking down on private landlords who are avoiding tax. It has been calculated by HMRC that this tax avoidance costs more than £550 million per year. Tightening controls with a register, Labour claims they will raise £100 million.