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Stamp duty giveaway in budget to boost recovering housing market?

by David Parton

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An eve of Budget rumour has been circulating about a proposed increase in the entry level band for Stamp Duty Land Tax to £250,000.

If the rumour proves correct, no tax would be paid by residential property buyers for purchases below a quarter of a million pounds.

Chancellor Alistair Darling can ill afford many pre-election giveaways, and has already warned that the Budget would be 'sensible' and 'reflect the times in which we live'. However, he has also pledged that the Government would continue to spend money to support economy and keep people in jobs.

It is apparent that the housing market, which has suffered significantly throughout the recession, with transaction volumes in 2009 hitting only half of their peak in 2007, remains vulnerable, due in part to the cost and limited supply currently of mortgage finance, combined with the expense of property and the associated costs of purchasing a home.

Conveyancing partner David Parton said: "The Chancellor will be anxious to try and avoid the much feared double dip in property values, which had shown signs of recovery towards the end of 2009, helped then by the stamp duty holiday which came to a premature end in December."

"So much consumer confidence and personal wealth is determined by the value of our homes. Any suggestion that this value has started to erode again would undoubtedly hurt economic recovery.

"Raising the Stamp Duty Nil Rate Band to £250,000 would inspire greater confidence in a housing market and in turn wider economic recovery, benefiting those beyond first time buyers and taking the large majority of home ownership purchases outside this out dated and clunky tax system.

"Such a bold move would undoubtedly be welcomed by home sellers, buyers, and the wider housing industry. Let's keep our fingers crossed for later today that the rumour proves to be true."

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