Speculation mounts Chancellor will raise Stamp Duty threshold
Robert Sinclair, AMI Director, said: “The current Stamp Duty regime distorts the market and prevents first time buyers from getting a foot on the property ladder.
“The plans to raise the Stamp Duty threshold to £250,000, which we have been calling for, would provide a welcome boost to many first-time-buyers and also provide assistance to first time movers in many parts of the country.
“However, we hope that the reform will also include a more fundamental review of this antiquated ‘slab’ tax.”
The Council of Mortgage Lenders estimates that if a £250,000 starting threshold for Stamp Duty Land Tax had existed, around 92% of first-time buyers and 69% of home movers in 2009 would have been exempt from paying.
This compares with the actual situation, with the £175,000 threshold in place, which meant that around 73% of first-time buyers and 41% of movers were exempt.
The Stamp Duty “holiday” that saw the threshold temporarily raised from £125,000 to £175,000 took effect from 2 September 2008 and lasted until the end of December 2009.
If the threshold were now raised to £250,000, the CML estimates this would result in approximately 350,000 households (including cash buyers, not just those with mortgages) buying properties between £125,000 and £250,000 benefiting over the rest of this calendar year. The cost might be around £630 million to the government.
Over a full 12-month period, the number of those newly exempt (buying properties at values between £125,000 and £250,000) would be around 450,000, at a cost to the government of around £800 million.
This would add to the approximately 220,000 households already expected to be exempt in 2010 (buying properties at values up to £125,000), and would mean that around two thirds of all transactions would be exempt.