The Social Market Foundation’s plan for a capital gains tax on residential property wealth is “bonkers”, according to the Family Building Society.

The suggestion is contained in Paying for the Coronavirus, July 2020 a report by Michael Johnson, who calls for the scrapping of stamp duty on house purchases and the introduction of a new property capital gains tax as a way of addressing intergenerational fairness and the ability to pay.

Mark Bogard, CEO of the Family Building Society said: “This is really important, complicated stuff; it needs to be thought through very carefully. You cannot throw real issues aside with sweeping generalisations.

Craig McKinlay Kensington Mortgages

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“It does the debate a disservice. It takes no account of inflation or spending on home improvements, remortgaging or any equity release loans that may well have been taken out between purchase and sale. It’s bonkers.

“The proposal to scrap stamp duty, something we have campaigned for relentlessly, is welcome. The Osborne reforms only gummed up the housing market and did little to solve the housing crisis.

“The idea of making stamp duty a sales rather than a purchase tax does have some merit. But these proposals won’t work, nor address intergenerational fairness.

“While Mr. Sunak’s stamp duty holiday for buyers paying under £500,000 is to be welcomed it is also likely to have the perverse effect of encouraging more buy to let landlords and those snapping up second and holiday homes, at the expense of genuine first-time buyers.

“Stamp suty was meant to be an admin and processing tax, not the easy and lazy stealth tax that modern Chancellors have made it”.

Bogard said that the property wealth tax proposal will only deter people from downsizing thus further gumming up the market. “People did not buy family homes as an investment but somewhere to live and raise families.

“It is not their fault that due to inflation and successive governments’ failures to put forward sensible policies to solve the housing crisis that house prices have increased so much. There are far better ways to tax wealth and address intergenerational fairness. Let’s get together and do some real thinking about this.”