UK - Pension funds will increase their exposure to property if stamp duty is reduced in this month's Budget, according to Aberdeen Property Investors.
Stamp duty has risen steadily since 1997 and in 2000 it was increased by one percentage point to 4%.
Aberdeen Property Investors UK chief executive David Hunter said: “A reduction in stamp duty would encourage funds to take a higher exposure to property, enhancing return and contributing to resolving the under-funding crisis.”
He added: “At 4% the loss on buying a property is just too great and responsible pension funds have no option but to do the best for their members by entering into stamp duty saving schemes.”
Hunter though fears the government may seek to clamp down on the growing number of pension funds which are getting round stamp duty in this way.
Aberdeen Property Investors takes the view that there is a threshold below which investors will be prepared to absorb the tax, rather than go through the complications of avoidance schemes.
The constructive approach they argue would be to reduce stamp duty to a maximum of 3% to reduce the use of such schemes – in doing so increasing the government’s tax take.
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