“We all know the housing market in this country is a mess,” says
Paul Johnson. Ultimately, this will only be fixed by building more
homes, but it will take many years for the benefits of that to feed
through the system. In the meantime, we could improve the
situation by reforming the nonsensical way property is taxed,
which makes things so much worse. First, there’s council tax. This
is “fine in principle”, but outdated and regressive in practice,
based as it is “on the relative value of properties from a quarter of
a century ago”. What we pay bears increasingly little relationship
to our house’s value. Then there’s stamp duty, a pointless transaction
tax that gums up the housing market by punishing people
for moving. It discourages people from relocating to where jobs
are, makes it harder for young families to trade up, and forces
older people “to hold tight to bigger properties they might prefer
to leave”. The solution is clear: ditch stamp duty altogether, and
recoup at least some of the lost £7.3bn by increasing council tax
on more expensive properties, so that the amount their owners
pay is more closely related to what their house is actually worth.
