Government schemes designed to support first-time buyers are unlikely to succeed without comprehensive reform of the UK’s stamp duty system, according to a senior property adviser. Stephen Hemmings, Partner and Head of Property Sector at Menzies LLP, argues that current tax rates are deterring the necessary investment for new housing supply.
Mr Hemmings made his comments ahead of the Budget later this month, which is expected to include the launch of the Your First Home scheme. He stated that the property sector needs stability from the Budget and a clear signal that the Government aims to encourage investment, rather than treating property as an easy source of tax revenues.
He pointed to a 15-year accumulation of tax changes, including modifications to Stamp Duty Land Tax and higher income tax for buy-to-let investors, which he believes has damaged market confidence. Mr Hemmings also noted that buyers face challenges from high interest rates, heavy tax burdens, and rising costs, potentially complicating the government’s target of delivering 1.5 million new homes by 2029.
Specifically, Mr Hemmings highlighted the 5% surcharge on stamp duty for investors in new rental homes as a barrier to increasing housing supply. He noted that while the Your First Home scheme may attract first-time buyers, it does not address this deterrent for investors. He called for a comprehensive review of the property tax regime and clarity on the direction of the Mansion Tax.