Harris Lamb Blog – Stamp Duty

 


Thomas Morley

16th September, 2011.

Stamp Duty is the Most ‘Obviously Stupid Tax’!

By Tom Morley, Associate Director, Commercial Agency.

  

 

The route provides 27 miles of privately funded and operated highway from Coleshill in North Warwickshire to Cannock in South Staffordshire.  The road carried an average 47,592 vehicles on weekdays in the summer of 2010  and from my experience of the Toll Road, private cars form the vast majority of the traffic.

The M6 Toll Road was identified as an “M6 Relief Road” to alleviate congestion on the M6, which is something many people feel has not been adequately addressed and, with one way car tolls at peak periods of £5, this is something to be debated elsewhere.

From a property perspective the benefits have probably been more tangible than the traffic improvements.  The southern end of the Toll Road and the ‘T1’ junction close to J4 M6 coincided with some of the latter stage build projects at the Hams Hall National Distribution Park, a 430 acre business park which ranks as one of the best such employment parks in the UK.

Junctions T2 and T3 appear to largely function as commuter gateways for those living to the south and east of Sutton Coldfield from where national motorway access has improved considerably and the effect on house prices has been positive in these areas.

The access to Junctions T4 and T5 at Weeford and Lichfield has given a stimulus to residential and commercial property markets alike with possibly the biggest winner being the 300 acre Fradley Park, where some of the largest distribution buildings in the area have been built with more to come.  We are marketing the new Fradley Prologis Scheme with 70 acres and units to 700,000 sq ft available to be built and which will be on site shortly.

T6 Burntwood, a forgotten part of the West Midlands conurbation 10 years ago for business and for new build residential perhaps, has not quite been “transformed” but certainly “considerably improved”.

T7 & T8 and the Cannock access points to the Toll Road provided the catalyst that has helped to promote the former coal mining town into a first rate employment location.  Significant development of a cross section of employment type accommodation from offices to manufacturing and warehouse operations has bought vitality to Cannock which I think is largely due to the Toll Road passing the town’s doorstep.

For those drivers who still regularly sit stationary on the M6 between junction 8 and 10 bemoaning the state of the traffic and whether the Toll Road has done the job it promised, the tangible benefits are probably in property as much as traffic counts.  The commercial new build and viability of new schemes along the entire length of the Toll Road has been transformed since the road was built.

The Institute for Fiscal Studies came out with this observation on 13th September 2011, saying that Stamp Duty is inefficient and damaging and that by abolishing it in favour of a reformed Council Tax would be far more efficient with the Council Tax based on up to date property values (the Rateable Value and an enhanced payment via the Rates).

The review that was carried out cited the current system as “overly complex and frequently unfair” and sweeping changes are badly needed.  They say a re-arranged property tax system could bring tens of billions of pounds in economic benefits following an overhaul.

From a property professional’s perspective I have to say the levels and differentials in Stamp Duty bands has significantly increased as a cost and factor in property decisions.  Whilst not quite a driver in property decision making, it is nonetheless a significant factor.  Not only have costs increased but complexity has also increased with the various bands of value given differing rates of tax plus the differences between residential and commercial properties.  The Stamp Duty on leases is also significant and not always easy to work out.

I think that an abolition of Stamp Duty and a more locally enhanced tax based on the Rateable Value and Value Band of property would be far better and a potential catalyst for activity in the market at a time when we are looking for measures that help stimulate the market.

The report singled out stamp duty which will raise nearly £6billion this year, as discouraging people from moving and following an illogical structure, making it the most “obviously stupid” tax examined in the review, Paul Johnson, the IFS director, said.  Other ideas in the 524-page report included the integration of income tax and National Insurance.

The time has come for a robust look at all our property taxes and how we shape a system that stimulates and encourages the way the market operates.


If you are thinking of relocating, selling or letting your commercial property, or if you just need some general advice, Tom would be eadger to speak with you. Call him on 0121 4559455 or email thomas.morley@harrislamb.com.         

Disclaimer: The views expressed within this article or weblog (‘blog’) are the personal views of the contributors and authors only and do not necessarily reflect the views of any named companies or thier employees.