Stamp duty break for lower value properties
2 Sep 08
12-month threshold of £175,000 among government moves to buck up housing market
The UK Government has announced that it will remove stamp duty from properties that cost less than £175,000 in a bid to help the housing market over the next year.
The tax break, which will run for 12 months, comes into effect tomorrow (Wednesday 3 September), raising the threshold from £125,000.
As a measure to help first time buyers in England, the government is also to offer loans free of charge for five years on up to 30% of the value of new properties, to households earning less than £60,000. The scheme is to be co-funded by the state and developers.
A government spokesman said hundreds of millions of pounds had been put aside in the last budget to fund the loans.
Continuing slide
Sales of housing across the UK have slumped drastically in recent months. New figures from the Bank of England show that the number of new mortgages approved for home buyers is down by 71% on the same time last year – just 33,000 in July 2008. Bank lending to all mortgage borrowers reduced by £12.1 billion, the biggest monthly contraction on record.
Adrian Coles of the Building Societies Association (BSA) said the figures suggested that the housing market would continue to be depressed for some time.
Howard Archer of Global Insight said the mortgage data indicated that housing prices would continue to fall over the coming months – by 15% in 2008 and 12% in 2009.
James Aitken from the Law Society of Scotland's tax law committee and senior associate at HBJ Gateley Wareing, said: "The Society welcomes moves to help housebuyers and sellers and, we hope, will help kick start the housing market, but this is essentially a stop gap measure.
There is now a huge leap from properties valued at £175,000, on which there will now be no stamp duty land tax (SDLT), to those people buying properties worth more than £250,000 having to pay an additional 3%, which adds at least another £7,500 to the cost of a property.
"There have been deeper issues with SDLT in Scotland in the five years since its introduction. There is a lack of knowledge of Scots law and conveyancing in Scotland within HMRC which has created long term problems.
"The Society thinks the stamp office in Edinburgh needs to be properly resourced or that there should be a link with an organisation such as Registers of Scotland to increase efficiency and ensure that conveyancing in Scotland works properly for all concerned."
Scots attack
The announcement came as the boss of a leading Scottish law firm attacked the UK Government for failing to deal with problems in the housing market.
Harvey Aberdein, the managing partner of the north-east firm Aberdein Considine, accused the UK Government of incompetence due to its "apparent inability to implement any ideas to get the sector moving". The firm is being forced to make about 20 people redundant from its offices across the north east and in Perthshire.
Mr Aberdein said the lack of mortgages at the lower end of the market had had a real knock-on effect and that first-time buyers were struggling to get on the property ladder. He added that he was enormously disappointed that the SNP Government in Scotland had elected to go ahead with home reports, calling them “deeply flawed” and a move that would discourage both buyers and sellers.