Berkeley Group has called for urgent reform of stamp duty in the Budget, arguing that changes to the tax regime are needed to increase housing transactions and help unlock stalled development sites.
The house builder is urging the Government to cap stamp duty at 1% for first-time buyers and downsizers, while removing the 5% surcharge applied to additional properties and investors.
Berkeley said the current stamp duty land tax regime had become a “binding constraint” on the housing market as interest rates have returned towards more normal levels. It argued that weak transaction volumes are reducing activity across the housing market and limiting the number of new homes that can be brought forward.
Revealing his direct approach to Government at the company’s AGM today, executive chairman Rob Perrins said: “To meet the Government’s target of 300,000 new homes per annum, and help address the cost-of-living crisis by making homes more affordable, the current stamp duty regime requires urgent reform.”
Berkeley cited previous estimates from the Office for Budget Responsibility suggesting that a 1% reduction in stamp duty could increase housing transactions by up to 6%.
The company said its proposed changes would target three areas of the market. A 1% cap for first-time buyers would reduce the upfront cost of purchasing a home, while extending the measure to downsizers is intended to encourage older homeowners to move into smaller properties. Scrapping the 5% surcharge on investors would, Berkeley argued, support investment in privately rented housing.
The house builder said higher transaction volumes would improve the viability of new residential developments by increasing demand and supporting sales rates. It also argued that this would help schemes progress where the economics are currently preventing development from starting, with affordable housing delivered alongside private homes as part of larger schemes.
Berkeley also backed the Government’s recent planning reforms, particularly measures intended to accelerate development on brownfield land in London.
The company said it was making progress in taking sites through the revised planning system, but warned that a more consistent approach to development was required when individual schemes reached the decision stage.
Berkeley argued that planning reform alone would not be sufficient to increase housing delivery if development sites remained constrained by transaction costs and other regulatory pressures. It said faster planning decisions, lower regulatory costs and changes to stamp duty would together improve the conditions for restarting stalled schemes.
The house builder’s intervention comes as the Government seeks to increase housing supply towards its target of 300,000 new homes a year. Berkeley said reform of stamp duty should form part of that approach by reducing the tax burden on transactions and improving the movement of existing housing stock.
It argued that increasing transactions could also generate additional economic activity and, potentially, increase overall tax receipts by expanding the number of property sales rather than relying on higher rates of tax on a relatively low volume of transactions.
