A little symbolism for home owners

Share
Related Topics
With a majority of nine, facing disgruntled voters nostalgic for the days of gravity-defying house prices, and reading last week's predictions of rising repossessions and falling prices in some areas, the Government is understandably tempted to stimulate the housing market - hence yesterday's hints that stamp duty may be ended.

Most of the ideas for giving home ownership a tonic, such as tax breaks for people with negative equity or increased mortgage tax relief, would be inflationary or costly or both. After years of tax manipulation and distortion in the housing market, home ownership is at last returning to the place it had in our economy 40 years ago, when people regarded a home as a place to live rather than a speculative investment. The economic damage wrought by house price inflation in the Eighties ought to remind the Chancellor, if not the Tory right wing, of the hazards of such intervention. Moreover, since some 68 per cent of homes are owned by the people who live in them, money to help one group of home owners has, in practice, to be taken from another group. If this redistribution has any impact at all, it could well be neither fair nor effective.

Nevertheless, the 300-year-old stamp duty is one area of housing finance that deserves a rethink. It is a penalty for moving home, levied at 1 per cent of the sale price on houses over pounds 60,000, which brings the Treasury some pounds 750m a year. That may be a large sum in absolute terms, but it is a modest proportion of the total public finances. When house prices were soaring, it was probably harmless to secure a small part of those gains for the taxpayer. Now that prices are stagnant and many labour markets tight, a tax on mobility is indefensible.

If potential Tory voters were persuaded that a 1 per cent tax makes a difference, abolition would be politically useful. More houses in the South are worth over pounds 60,000, so that removal would benefit the so-called "Tory heartlands" (that is, the ones where the Tories lose by-elections to the Liberal Democrats by slightly fewer votes). John Redwood and the right wing '92 group of Tory MPs are pressing for targeted bribes, through the tax system, to electorally important groups such as home owners. But what they want is a seriously inflationary restoration of Eighties mortgage interest tax relief levels, not the relatively minor business of ending stamp duty.

However, trapped between an impending interest rate rise and a tight spending round, the Chancellor has little room for manoeuvre. It should be possible for him to resist the cries of his right-wing backbenchers who oppose inflation except in house prices and state subsidy for consumption except in home ownership. He need not abolish the duty altogether. Either raising the threshold at which it is paid, or levying it only on the portion of the purchase price above that threshold might give a useful small fillip to house sales.

For many people unable to sell or buy for other reasons, the change would be largely symbolic. But many Tory MPs would find a little symbolism rather welcome right now. Provided that they do not imagine that it will do much either for the housing market or their party's voter appeal, they should give the idea the stamp of approval.

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Training Coordinator - Financial Services

£32000 - £38000 per annum + benefits: Ashdown Group: A highly successful, inte...

Recruitment Genius: Supply Chain Administrator

£8000 - £10800 per annum: Recruitment Genius: A Supply Chain Administrator is ...

Recruitment Genius: Client IT Account Manager

£25000 - £30000 per annum: Recruitment Genius: A Client IT Account Manager is ...

Day In a Page

Read Next
 

The epic mug battle is only the latest in a cheap set of campaign gimmicks set to define this election

Nash Riggins
 

Daily catch-up: the endless and beginningless election campaign goes up and down

John Rentoul
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor