Think-tankers and policymakers have been out in force over the past few weeks shooting out ideas about how to shift some of the burdens from the shoulders of my generation — the student loan generation, generation rent or ‘those entitled millennials’.

The vast majority of those ideas are, frankly, useless. Recently, I wrote on why the Resolution Foundation’s idea to give everybody in my age group £10,000 on their 25th birthday was a ridiculous idea — it fails to account for wealthy, young people (they do exist), patronises those who are in need of mature solutions, and would essentially be a pointless drop in the ocean.

There are plenty of policies that the government could implement to help young people and win their trust: mental health care for students, taking young people out of national insurance contributions, legalising the marijuana market and building on the green belt to extend the opportunity of property ownership to all.

The one, indisputable, issue that needs fixing for young people — if the Government wants to heal the divide — is housing. The one policy that would absolutely get the housing market moving for everybody, but especially young people, is the abolition of stamp duty.

Not just for first-time buyers, as Philip Hammond did on houses in a certain price range in the most recent Budget; not just for people in a certain age grouping; not just those in a certain region — the last policy discriminated against houses in London due to their higher value; but for everybody.

Stamp duty — in essence — freezes up the housing market by adding a chunk onto the cost of a property. It is a tax charged by the government when you buy a property. The amount you pay depends on the cost of your new home.

It prevents older people moving out to more manageable homes which would free up space for young families. It prevents young people earlier on in their careers from getting that first step on the housing ladder. The tax is even hurting those who rent as landlords are perfectly able to pass their costs incurred by buying a property onto their tenants. According to a CapX article, for every £1 raised, Stamp Duty does 75p of economic harm. There are barely any winners.

There are plenty of taxes which are distortionary and hurt ordinary people. The Government has been right to keep raising the threshold at which people start paying income tax, and should continue down this route. Dramatically slashing inheritance tax is becoming increasingly popular. But the issue of the day is housing, and the generational divide it has undeniably caused. Abolishing stamp duty to allow more money to stay in the pockets of first-time buyers is surely the logical first short-term step to address the split.

 

Written by Matt Gillow

Matt Gillow is Founder and Head of Public Affairs at 1828.