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7 June, 2007

Stamp on it

According to a proposal by Peter Hain, a candidate for the deputy leadership of the Labour Party, reported by the Guardian, "stamp duty could be switched from home buyers to sellers to help young people get on the housing ladder".
That might be a short-term vote winner, but it displays entirely the wrong attitude.

Home ownership is a privilege, not a fundamental right. The right to shelter is one thing, and certainly is an issue of social-provision, but not ownership of that shelter. I fully support state subsidies in the rental sector, but house ownership is an aspirational luxury and a matter between the individual & his/her bank manager – I don't consider that the state has any duty to help buyers enter the market.
Hain is suggesting a very odd variety of socialism: take from the 'rich' (actually the ordinary bourgeoisie) not in order to benefit the proletariat but to assist those at an earlier stage of the bourgeois lifecycle in the acquisition of private possessions (quite literally, to render proles bourgeois).

Compare this to state health care: the NHS would rightfully pay for a hip replacement, but not some non-essential* variety of cosmetic surgery. People need pain-free mobility, but don't need perky nipples. Vanity is a private-sector topic.

That's one issue. Another is the way Hain proposes to help first-time buyers: by obliging existing home owners to make a compulsory charitable donation.

Buying a house is a financial transaction like any other: the seller charges whatever the market will bear, and the burden of meeting that price is the buyer's. Can't afford: can't have. Why should the seller pay any of the buyer's costs? For the 'warm fuzzies' of community-spiritedness? Why should I care whether "young people get on the housing ladder", never mind make a personal donation to that cause?

Apart from that basic illogicality, it seems especially unfair that the same assistance wasn't available to existing homeowners when they were first-time buyers, which means they'd be paying stamp duty twice on the same property.
Hain says that "a move like this would be revenue-neutral, but would be an enormous boost to young people", but consider that again: it would have no effect on government income, as stamp duty would still be paid into the Treasury, but it wouldn't exactly be 'revenue-neutral' for private sellers.

If, if, there's any argument for the government assisting new buyers into the housing market (and I don't doubt it would help the overall economy), how about the government bearing the cost itself by reducing or foregoing stamp duty for first-time buyers, rather than penalising sellers? Oh, no; that simply wouldn't do, would it?

There is a simple way round this for sellers: raise the asking price to cover the cost of stamp duty, so the buyer pays it anyway. I know that's what I'd do.


*: I do mean purely elective cosmetic surgery, of course – I fully acknowledge that there's essential, corrective cosmetic surgery too, which is an entirely legitimate area of state health care.

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