Property market needs SDLT holiday: PFK

A temporary reduction or suspension of stamp duty land tax would help revitalise the property market and be a 'small price' for the Government to pay, according to a real estate tax expert at PKF.

Marios Gregori has called for the measure to be introduced in the Budget later this month, and insisted that there would be little risk of a resulting short-term property boom during the recession.

The Treasury collected £10 billion in SDLT in 2007-08, but receipts in 2008-09 will be much lower, he said. 'On very simple projections from the number of property transactions alone, SDLT receipts will be less than £5 billion for this financial year; probably much less when you take into account falling asset values.

'If 2009-10 activity stays as low as it is now – around a third of the number of monthly transactions we saw in 2007 – annual SDLT receipts could go as low as £2.5bn.

'Giving up this amount of revenue for, say, two years to help kick-start the property sector – and perhaps boosting related sectors of the economy – seems a small price to pay compared to the billions spent on November’s controversial VAT cut or the money used to prop up banks.'

A more drastic move by Alistair Darling on the 22nd would not only not only spark significant movement in the property market, it might also help prove ministers' commitment to the environment, added Mr Gregori.

'If the Chancellor is feeling brave, he might simply choose to abolish SDLT in its current form. During a two-year breathing space, the Government could then consult on a new property tax; perhaps one based on the energy efficiency of buildings. This would back up statements about cutting carbon dioxide targets and creating jobs in the green economy.'

Expanding on the subject of property and the environment, Mr Gregori remarked: 'The Government really has to approach green incentives on a broader front, perhaps setting a higher rate of relief for all zero-carbon buildings, and a lower rate relief for homes and commercial buildings that meet less stringent energy efficiency standards.'

Categories: News , Budget 2009 , Land & property