London mayor Boris Johnson will renew his calls for London to be allowed to keep £1.3bn stamp duty raised in the capital to build new homes.
Johnson previously called upon the government to relinquish its steely grip on money raised in stamp duty last year, saying that the funds could be used for regeneration schemes and housing. Given that London’s stamp duty apparently accounts for a third of revenues raised from the tax, we think he has precisely two hopes of chancellor George Osborne agreeing.
The mayor says the revenue is needed to ensure London can build 1m homes by the mid 2030s, taking fiscal responsibility away from the chancellor and putting it in the hands of City Hall. His argument that the capital’s overheated property market should benefit Londoners rather than other towns has so far fallen on deaf ears. Although the government has previously been keen to devolve certain powers, we suspect that Scotland’s plans to replace stamp duty in 2015, thus removing another source of revenue from the treasury, also won’t go a long way towards encouraging Osborne into handing over £1.3bn to London. The mayor said:
“Since I was elected London’s population has grown by 600,000 and is forecast to rise by a further million at least over the next 25 years. If we do not come up with a new plan to build the homes we need, this great city will suffer and the whole country will feel the consequences.
“What is needed now is a radically different approach which optimises City Hall’s role, unlocks the potential of the capital’s boroughs, allows developers including housing associations to up their game and creates a stable supply of land for housing. Above all, London needs a stable funding stream which will support and accelerate its housing and infrastructure delivery.”
Last year, Boris Johnson also urged the chancellor to close a loophole which allows property owners to avoid stamp duty by treating the house as a company. Offshore investment in London property is at an all-time high and is frequently criticised for driving up prices while allowing owners to take advantage of favourable tax conditions at the expense of the city’s residents. Clearly, if City Hall somehow managed to retain London’s stamp duty, removing (or more likely amending) that loophole would be very much in the mayor’s interests.
The mayor plans to highlight his calls for devolution of stamp duty to housing industry experts at The Chartered Institute of Housing Annual Presidential Dinner at the Natural History Museum tonight.
Photo by violinconcertono3 in the Londonist Flickr pool.