Buyers of homes worth up to £175,000 will not have to pay stamp duty, Alistair Darling has announced, as he promised the country would "get through" the economic downturn.
In a surprise move to attempt to revive the housing market, the Chancellor said that the £125,000 threshold at which buyers pay 1 per cent stamp duty will be raised on transactions up to £175,000 completing on or after 3 September 2008 and before 3 September 2009.
Ian Fretten, Head of the Conveyancing Team from Frettens, comments "At least the announcement has cleared the air. Those who have delayed making a purchase following the rumours of a stamp duty suspension, are now likely to re-enter the market. Unfortunately, the value of an average home in the Christchurch, Bournemouth, Poole conurbation hopelessly outstrips the new stamp duty threshold. Today’s proposals do not address the core problem, which is the collapse in mortgage availability, but hopefully it is an indication that the Government are taking steps to begin addressing this problem."
The stamp duty freeze came as the first major move in the attempted autumn relaunch by Gordon Brown, who also announced a range of measures to try and help home owners who face having their properties repossessed because of the credit crisis.
Analysts have warned that the measure will have little impact on the market and could even worsen Britain’s present economic plight. To them, this move doesn’t go far enough in terms of the starting threshold and they question whether it will incentivise buyers who wouldn’t have entered the market otherwise. Those that benefit from the stamp duty holiday will enjoy a cost saving of no more than £1,750. Lenders now routinely demand deposits of 20 per cent, especially from first-time buyers, who they see as a risk, equating to £25,000 on a £125,000 property, or £35,000 if you spend £175,000. For buyers in all parts of the UK, it may take more than this short-term stamp duty holiday to entice them back into the market.
However, the announcement was immediately welcomed by some mortgage lenders who have seen house sales almost grind to a halt in the last year. A spokeswoman for the Halifax, the UK’s biggest mortgage lender, said: "We welcome the Government’s stamp duty initiative. This is a sensible measure and it will help the housing market."