Has the Chancellor gone far enough in helping the housing market in these troubled times?
April 25, 2009
In his speech to the House of Commons, Chancellor Darling outlined a £600 million package of new measures aimed at stimulating the beleaguered housing market. In his attempt to stop the slide in property prices and entice new buyers and movers, the Chancellor is to extend the stamp duty holiday on properties worth less than £175,000 which was due to end in September. Homes sold for less than £175,000 will now be exempt from the charge until the end of December. After this, the 0% threshold will fall back to £125,000.
Currently, properties worth more than £175,000 incur 1% stamp duty. If you purchase a home worth between £250,000 and £500,000 you will continue to incur an eye watering 3% charge and buyers of homes priced at more than £500,000 must pay 4%.
The stamp duty waiver is intended to offer an incentive for first-time buyers to step on the property ladder this year, but housing experts fear it could only harm the market's recovery at the beginning of 2010. In a classic smoke and mirrors manoeuvre by the Chancellor, the stamp duty holiday is considered to be nothing more than a gimmick with most homes in the south east exceeding the £175,000 barrier anyway. Additionally, what incentive does this really offer to those homeowners whose properties are worth more than £175,000? From bitter experience, I have recently had to pay 3% stamp duty on a £500,000 purchase. A stealth tax I remain resentful at paying. If the Chancellor really wants to send out a positive message that his government is keen to get people moving again, how about halving these quite preposterous charges or better still, removing them altogether?
Whilst stamp duty is an issue, the main obstacle to recovery is the lack of available mortgage finance at reasonable rates of interest for first time buyers. If people cannot secure mortgages at reasonable rates of interest, what incentive is there to buy a home?
For many, extending the stamp duty holiday will do little if anything in convincing them that now is the right time to move. The Chancellor has wasted a real opportunity to show that his government really does care.
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