Stamp Duty Benefits Questioned
Doubt has been cast over the benefits of increasing the stamp duty bracket from £125,000 to £175,000, which was announced by Gordon Brown yesterday. Experts state that a massive increase in house purchases needs to occur in order for taxpayers to achieve the savings of £600 million that has been forecast.
Less than 24 hours after Gordon Brown’s announcement some tax experts are already questioning whether the government has over-estimated the benefits from the stamp duty changes.
Despite these changes providing a much needed boost to the British economy and housing market Gordon Brown has come under fire for promising tax relief figures that are considered to be unachievable.
House sales are currently falling due to a lack of available mortgages, and unless this picks up drastically experts predict that savings are more likely to be in the region of £200m. However, several high street lenders have cut mortgage rates in light of the stamp duty changes, which could give the housing market a much-needed lift.
In order to achieve the £600m relief to taxpayers, as promised yesterday, 400,000 homes at the value of £150,000 must be sold by September 2009.
Having looked at current sales figures experts state that just 250,000 homes were sold within quarter one of 2009, and of this number just 42,500 fell within the £125,000 - £175,000 price bracket. This equates to 170,000 sales in one year.
Even in a booming market, when approx 1.4m house purchases are made, only 240,000 of these fall within the required price bracket – £125,000 - £175,000.
There is no denying that the changes made by the government will be beneficial to the housing market, with at least 17% of buyers benefiting from the scheme. However, Browns inflated forecasts have led critics to view this as the latest campaign to boost popularity at a time when opinion polls for the Labour Party are at an all time low.
