Get Britain Building Could Bulldoze Building

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Rachel Reeves and Keir Starmer plan to build 1.5 million homes over five years if elected. They will fund it through reforms to stamp duty – but one observer thinks the move would bulldoze rather than enliven building.

David Hannah, group chairman of Cornerstone Tax and a stamp duty expert, thinks increasing the stamp duty surcharge for overseas buyers could have disastrous consequences for the property market.

He says: “Labour’s overarching goal is to make 70% of British households homeowners. These new homes will be primarily funded through reforms to stamp duty, increasing the rate for overseas buyers. As things currently stand, overseas buyers pay a 2% surcharge on UK property and a further 5% if said property will not be their main home.

“By raising the stamp duty surcharge for overseas buyers, developers will be put off building new homes for fears of a squeezed market when trying to sell them.”

“Raising the non-residents’ surcharge past the current rate would be extremely problematic in the current climate and it can only lead to a collapse in house building by private developers and further increase unemployment.”

Hitting the wrong targets

Hannah adds: “On top of this, a Starmer government would absolutely need to extend the current exemptions beyond Crown Employees as the surcharge would be hitting unintended targets including, overseas charity workers and UN staff.

“Whilst the intention to make more of Britain's households homeowners is clearly a good one, there must be careful thought put into how any government would achieve this, rather than increasing a blanket charge for all overseas residents on stamp duty.

Interventionist approach

“These policies mark a shift towards a fiscally interventionist approach to the housing market within the Labour party, further signified by Keir Starmer’s proposed tax on private developers to fund new social housing.”

Not meeting demand

Hannah’s response comes at a time when the UK housing market faces an overwhelming supply and demand imbalance, with the National Housing Federation estimating that at least 340,000 new homes must be built each year to meet the current demand.

Picture: Get Britain Building and 70 per cent home ownership is the Labour party’s plan funded from stamp duty and other taxation – David Hannah of Cornerstone Tax thinks this could be a big mistake.

www.ctatax.uk.com

Article written by Cathryn Ellis
18th October 2023

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