Tory proposals to increase the stamp duty threshold will encourage property sales, but further action must be taken to reform the tax, The National Association of Estate Agents (NAEA) said today.
Stamp duty has become a hot political issue in the run up to the general election. Labour increased the threshold to £120,000 in the budget last month, the Conservatives pledged yesterday to set it at £250,000 and the Liberal Democrats' manifesto says they will raise it to £150,000.
But raising the limit at which stamp duty kicks in is not the whole solution, according to industry experts.
"We've been calling for years for a revision of this archaic system, which the Conservatives pointed out yesterday is a form of stealth tax, affecting so many first-time buyers," Peter Bolton King, chief executive of the NAEA, told Guardian Money today.
"The threshold should be raised to £150,000, but importantly, the parties must look at thresholds above that. It's madness that when the price goes 1p over limits, people pay three or 4% on the whole amount."
"It should be changed to a sliding scale, calculated on the same basis as income tax," Mr Bolton King said.
The NAEA's latest survey showed that the number of first-time buyers had shot up to 20% of all sales, from eight or 9% in previous months.
"This indicates that the stamp duty threshold increase to £120,000 is having a knock-on effect," said Mr Bolton King. "Clearly, if the limit was raised to £250,000, as the Tories propose, this would encourage more sales."
Alliance & Leicester said that any move to ease the stamp duty burden for first-time buyers was a step in the right direction, and called for a stamp duty exemption for people buying their first home.
"One in four first-time buyers who bought a property in the last 12 months found that the cost of stamp duty was a major obstacle to getting onto the property ladder," said Stephen Leonard, director of mortgages.
"I urge all three political parties to seriously consider the plight of the first-time buyer and make them exempt from paying the stamp duty tax altogether."
And the Royal Institution of Chartered Surveyors (Rics) said that while the Tory proposal would remove around half a million homebuyers from paying stamp duty, a threshold of £150,000 and a review of the system could create a more efficient housing market.
"A house going over the Tory proposed threshold of £250,000 would attract £5,000 in tax," Rics economist, David Stubbs said. "An alternative would be the 'marginal' tax rate system used for calculating income tax, where tax is paid on just the amount over the threshold."
"Tory plans will help many first-time buyers but not those looking to trade up and perhaps start a family, particularly in southern England.
"A move to use the £1bn to smooth out the tax hurdles and equate the tax take more accurately with the price paid may have been more welcome."