Stamp Duty Holiday Arrives
The Government has announced that the starting threshold for stamp duty will be temporarily increased to £175,000. The measure comes into force on 4 September. It is said to be to help individual families in these difficult times.
Struggling home buyers – especially first-time buyers – have received a welcome boost as the Chancellor has announced that, for up to 12 months, stamp duty will be suspended on properties worth up to £175,000.
The move by Alistair Darling should help get the property market, and the mortgage market, moving again. However, sources from within the government said that the move was meant to help individual families, rather than boost the ailing markets.
The suspension of the unpopular tax will save buyers up to £1,750 when they are buying a house. The current level at which stamp duty starts is £125,000, so this is a temporary increase of £50,000 on the starting threshold. The Treasury estimates that half of all home purchases will now be exempt from the tax.
Prior to the ‘holiday’, properties between £125,000 and £250,000 are subject to 1% in stamp duty. For homes more than £250,000, it is 3% of the entire purchase price. Homes worth more than £500,000 incur a 4% rate. The stamp duty holiday starts on Wednesday.
Rumours of this move started almost a month ago and caused some turmoil in the market as buyers pulled out of deals, hoping to benefit when the new measures came into force.
Another move by the Government is the offer of a ‘free’ loan for first-time buyers purchasing newly built properties; the loans can be worth up to 30% of the property value, and will be available to families earning £60,000 or less. After five interest-free years a fee would become payable. The hope is that prices will have recovered by then making the fee less burdensome.
Liberal Democrat leader Nick Clegg was unimpressed by the announcements, saying they were ’a hotchpotch of measures thrown together to save Gordon Brown’s political skin’.
Tory shadow chancellor George Osborne was more receptive, saying his party would support measures that will work.
