Ed Miliband is right – first-time buyers need a tax cut

I hate to admit it, but Ed Miliband has a point about the need for raising the stamp duty threshold to £300,000 for first-time buyers. (The FT has the story tomorrow, and Sky News has the £300k detail). The tax was invented to give the government a slice of the more expensive
housing transactions –  the higher-rate threshold of £250k was introduced in 1997 when the average house cost £60k. Now, the average house is closer to £250k. This failure of stamp duty thresholds to rise with the market has been a way for Chancellors to cash in on the asset bubble. Stamp duty cost homebuyers £9.5bn last year – Osborne plans to jack this up to £18bn by 2019/20. A massive tax sting, through the anaesthetic of fiscal drag. (Osborne plans the same trick with inheritance tax).

That’s not right: buying your first home is hard enough, without the government whacking up the price even further. So lifting the threshold to £300k to compensate for the outrageous and cruel surge in property prices will be a welcome relief.