The property and construction sector makes a huge contribution to the British economy, with revenues from tax on property and transactions forecast to double in the next five years by the Office for Budget Responsibility.
However Stacy Eden, head of property and construction at Crowe Clark Whitehill is warning that the excessive taxes are hampering the property sectors’ ability to recover from the recent economic downturn, which in turn feeds into the escalating housing crisis in London and the South East.
“Property owners, investors and developers face a plethora of taxes,” said Eden, “with new ones added all the time. The stamp duty threshold, which should have risen threefold since 1997 in line with property price inflation, has stayed static. Similarly the inheritance tax limit has not budged, catching increasing numbers of people within its net
“A new mansion tax proposed by Labour and the Lib Dems would add a further burden to properties in London, where inflation has pushed many family homes within its ambit. Homeowners who purchased property for a few hundred thousand twenty years ago could struggle to earn the income to even pay this proposed tax.”
Eden adds: “All of these factors add up to an unfair and disproportionate amount of tax levied on property. Property inflation and skyrocketing house prices are outside the control of homeowners and private landlords, but these groups feel the heaviest tax burden.”
“While property bears the brunt of taxation, other sectors currently enjoy generous support from the government, with the manufacturing sector receiving a boon in the recent Budget announcement of the extension of the Annual Investment Allowance.
“It seems like the government sees property as a ‘soft target’ for heavy taxes and this is a shortsighted view, in my opinion. London and the South East are facing a housing crisis – simply put, there are not enough homes to meet demand. Disproportionate taxes on property fuel this situation, which will have huge implications for London in the near future.”
