Property Tax Comments Could Hit Recovery
Published December 2009
A Midlands property expert has hit out at a Bank of England policy maker for threatening to cause the fresh housing market downturn he claims he is seeking to avoid.
Peter Simner, a partner and head of residential property at MFG Solicitors, said proposals to charge homeowners penalty taxes on their properties in a bid to halt boom and bust in the sector was “completely inappropriate”.
It followed a call by Adam Posen, a member of the Bank's Monetary Policy Committee, that in future homeowners should have to pay an extra charge if prices rise too fast.
He even indicated that this may mean imposing capital gains taxes on first homes and raising stamp duty.
Mr Posen, the newest member of the nine-strong committee, said that while he was "speaking solely for myself alone as an economist looking at the boom-bust problem", he felt some kind of tax penalty on house prices was an important solution to Britain's repeated housing crashes.
Britons' first homes are currently excluded from capital gains tax, but Mr Posen appeared to indicate that he may favour imposing capital gains on existing homeowners, saying: "One would have to be careful not to bias the system against new or existing housing, so stamp-type duties would have to be equalised in some sense versus transfers or capital gains."
Mr Simner charged: “These sort of comments will not do the housing market any good at all either in the short or long term.
“This is obviously only one man’s view but he is a man of influence. If main residences were to be subject to capital gains tax it could stultify the property market.
“It could even put people off buying property.
“I am very surprised he has made these comments, particularly at the present time. Something like this could halt the recovery in its tracks.”
