RACHEL Reeves is under fire for plotting a raid on Britain’s homes — with warnings it could blow up the housing market.
Property expert Kirstie Allsopp said the Chancellor’s plans to reform stamp duty would have a “destabilising” effect and insisted it’s “not the place to fly kites.”
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It comes after reports Ms Reeves has ordered Treasury officials to draw up radical reforms to Britain’s property taxes to raise cash and boost growth.
Ideas on the table include scrapping stamp duty and replacing it with a yearly property levy, or slapping top-end homes with council tax hikes.
The Chancellor wants tax reform to be the centrepiece of her Autumn Budget as she battles a multi-billion blackhole in the nation’s finances.
Speaking to Times Radio, Ms Allsopp said: “Don’t fly kites like this. It is really destabilising for the property market.
“And when I say the property market, I mean people’s homes and their mortgages – and homes affect their relationships, their jobs, their education, their wellbeing in almost every way you can think of.
“It’s not the place to fly kites.”
She also accused the Government of wanting to “punish people for making the sacrifices they’ve made to buy their own homes”.
She added: “And we keep on having these conversations about, yes, you’re right, there is inequality.
“It does involve money that’s in property.
“And that is to do with the fact that subsequent, you know, numerous governments – and this isn’t a political thing, the Tories did this just the same – they’ve used stamp duty over the years to get money out of the system.
“And as a result, you know, lots of other things have caused price inflation, but stamp duty is a big part of it. And people now don’t move.”
The Treasury said in a statement: “The best way to strengthen public finances is by growing the economy — which is our focus. Changes to tax and spend policy are not the only ways of doing this…
“We are committed to keeping taxes for working people as low as possible.”
The Guardian yesterday reported that Ms Reeves is looking at proposals by former government adviser Tim Leunig, who suggested scrapping stamp duty and introducing a national proportional property tax on homes worth more than £500,000, alongside a local levy for properties below that value with a minimum annual bill of £800.
But Mr Leunig told the FT such a plan would be tough to pull off in the Autumn Budget, warning: “She needs money upfront and she has fiscal rules to hit.”
How a new property tax instead of stamp duty could affect you
FEARS are growing that a new property tax could be introduced by the government to replace stamp duty and council tax. Senior Consumer Reporter ADELE COOKE explains what is happening and how it could affect you.
What is happening?
Nothing yet. The government has not ruled out a new property tax, but any changes would not happen until the autumn Budget at the earliest – and a date hasn’t been set for that yet.
What do we know so far?
Yesterday, The Guardian published a story about how Chancellor Rachel Reeves is considering a new levy on houses over £500,000.
It said the Treasury has been considering suggestions from thinktank Onward.
The report recommended that if a property is worth more than £500,000 it would incur an annual tax of 0.54%.
It also said the government should consider scrapping council tax and replacing it with a 0.44% annual property tax on homes between £800 and £500,000.
It’s now up to the government to decide whether they will adopt a new tax and if they decide to move forward, how it will work.
If they do decide to introduce one then it’s understood that it would not be the same as the recommendations from Onward.
However, experts think it would be unlikely that the charge would be applied to homes sold before any rules come into force.
So now we need to see what Rachel Reeves decides to do, as she does have a £50billion black hole to fill.
What is stamp duty and council tax?
Currently there is no stamp duty to pay on a home worth less than £125,000.
The rate of stamp duty then gradually increases depending on the value of your home.
Stamp duty is charged at 2% on homes worth between £125,001 and £250,000.
But this rises to 5% for homes worth between £250,001 and £925,000.
Council tax is an annual fee paid to the local council to fund services such as road upkeep and state schools.
People pay more or less depending on where they live.
There had been fears that council tax will rise for millions under new government plans to divert cash to deprived areas.
Over three million households are owed a combined total of £544million in council tax refunds, according to a Sun investigation