Budget inaction on stamp duty burden
Despite calls from the housing industry for an urgent lowering or temporary suspension of stamp duty in order to help the ailing housing market, the government’s Budget yesterday ignored such calls and left the stamp duty threshold unchanged at £125,000. This will negatively affect first-time buyers in particular, who are already struggling with a host of other adverse factors.
[UKPRwire, Fri Mar 14 2008] Despite calls from the housing industry for an urgent lowering or temporary suspension of stamp duty in order to help the ailing housing market, the government’s Budget yesterday ignored such calls and left the stamp duty threshold unchanged at £125,000. This will negatively affect first-time buyers in particular, who are already struggling with a host of other adverse factors.
Last month Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said that stamp duty has reached “punishing levels” and that a government moratorium on the tax would help to kick-start the housing market and also boost consumer confidence. He pointed out that a precedent for such a move was taken by John Major in 1992, when stamp duty on properties below £250,000 was suspended for eight months in an effort to reinvigorate the market; but banking analysts claim that a similar suspension in the current Budget would cost the government around £100 million per month.
Calls to suspend or radically overhaul stamp duty were also made by the National Association of Estate Agents and the Council of Mortgage Lenders. The latter said that the tax burden has risen tenfold under Labour, which has made it more difficult for families to move home.
The Labour government has reaped the benefits of a huge increase in stamp duty revenues, which were worth £675 million a year prior to 1997, and a decade later are worth £6.4 billion. This enormous increase is due to the growing number of homes worth more than £250,000, the threshold at which the tax rises from 1% to 3%.
The Conservative housing spokesman Grant Shapps said the government “has betrayed ordinary families by making it harder to get on the housing ladder”, blaming higher stamp duty as well as Home Information Packs (HIPs) for making the problem much worse.
Commenting on the new Budget, Lawrence Smith of Decision Homebuyers said, “Freezing stamp duty at the current levels will do nothing to help the struggling housing market, and will come as a blow especially to first-time buyers who need any break they can get – and who are precisely the category which Labour claimed it would help to get a foothold on the property ladder.”
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