More calls for UK stamp duty to be scrapped as super suburbs become the new buzz
It is official, the UK has the highest property tax in the world and now there are more calls for it to be scrapped and for proposals for a mansion tax that still linger to never be brought to fruition.
Today an influential group of MPs, the Free Enterprise Group, have told British Chancellor George Osborne that stamp duty should be scrapped on properties worth under £500,000.
This follows a recent report from think tank the Policy Exchange which showed that property tax in the UK is higher than any other developed country. The combination of stamp duty, inheritance tax, capital gains tax and council tax means that Britons pay around £60 billion in property tax a year. This contributes 4.1% to the UK's economic output, much higher than the 0.9% in Germany, for example.
The Free Enterprise Group argues that the amount paid by first time buyers has increased so much, especially in London, that few now come into the bracket for 0% stamp duty at £125,000. It says that increasing the level to £500,000 would encourage more potential first time buyers to get on the housing ladder.
Currently it is estimated that 94% of property sales attract stamp duty. Buyers paying between £125,001 and £250,000 pay stamp duty at 1%, from £250,001 to £500,000 it is 3%. But the group points out that if the stamp duty threshold at £250, roughly the price of an average home these days, had increased with inflation that would now affect properties worth £1.2 million.
The Policy Exchange also said that 1.5 million new homes should be built by 2020 to come with demand, including the creation of at least one new garden city. That would mean 300,000 homes being built every year.
Indeed the idea of super suburbs or garden cities, initially a concept that originated in Victorian times, is becoming popular again. The Policy Exchange report says that new and attractively designed garden cities could act as beacons for development, creating huge housing and infrastructure projects.
Also as prices in London, especially central London, become too high for most buyers there is likely to be a move out towards suburbs and new garden cities could play their part.
According to a new analysis from Savills property values in the suburbs and inner commuter zone around London are now up 1.2% and just 1.3% below their previous peak respectively and are expected to be the star performers over the next five years.
'The gap between prime central London and its prime commuter markets has probably peaked and wealth has finally begun to flow out of the capital,' said Sophie Chick, residential market analyst at Savills in the report.
'We have already seen the predominantly domestic markets of outer prime London outperforming prime central London over the past year and anticipate that 2014 will be the year when the value gap between London and the lead suburbs and prime inner commuter belt finally begins to narrow. We expect 2014 to be the year of the super suburbs,'
she added.Meanwhile, the first ever comprehensive analysis of the success and failures of garden cities and new towns in the UK is to be carried out next year by the Town and Country Planning Association (TCPA), a housing and planning charity that began as the Garden Cities Association in 1899.
While the TCPA has been leading a re-invigorated campaign for a new generation of beautiful, inclusive and sustainable garden cities, there has never been a thorough study of the post war new towns programme.
Garden cities, such as Letchworth and Welwyn, are held up internationally as some of the best examples of how to get planning right, however many of the new towns they inspired have had more mixed success and face serious challenges over their ageing infrastructure, according to the TCPA.
Following on from a series of publications and events over the last two years on how to deliver garden cities and suburbs, the TCPA has three further initiatives due for publication in the coming months. It will be launching a Garden Cities guide for communities on 26November
2013 aimed at communities that want to grasp the garden city agenda.
It will highlight the opportunities that incorporating Garden City principles at the local level can bring. These include opportunities for self build, allotments, community land trusts, management of local parks and community facilities and community planning.
Then in January 2014 it will be publishing a good practice guide to long term stewardship models being applied to new communities in the UK. This will include the legal mechanisms available for establishing stewardship models and maintaining them in perpetuity, as well as understanding the options for meaningful community engagement and governance.
Then a month later it will publish an amendment to the New Towns Act which will allow a greater for role for local authority influence in development corporations, which were so phenomenally successful in the delivery of over two million homes in the UK, but now require greater democratic accountability.
So it would seem that the Victorian legacy to create suburbs and garden cities so that the middle classes could have a pleasant home in a nice environment it not so old fashioned and we could see these kind of values again in coming years.
Ray Clancy
