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Written by rosalind renshaw

The Stamp Duty holiday implemented in September 2008 and due to end on December 31, has helped only 115,447 UK home buyers – less than a quarter of the number predicted by the Government to benefit, according to property website Zoopla.

Between September 2, 2008 (when the tax break took effect) and September 1, 2009, the tax relief saved property buyers only £173m, compared to the £600m forecast by the Government.

The extension of the holiday to the end of this year will also provide only limited relief, says Zoopla, with an additional 37,500 buyers expected to benefit in the last four months of this year, saving a further £61m.

Whilst the impact of the tax holiday on buyers has been far lower than expected, the Treasury has been hit hard by the record low property transaction levels, barely scraping in £2billion from Stamp Duty in the 2009/10 tax year compared to almost £6.5billion in 2006/07.

Property buyers in London have benefited least from the Stamp Duty holiday, where typical house values (£374,284) are almost double the national average. Only 13% of transactions in the capital were eligible for the tax relief (£125,000–£175,000 price bracket) between September 2008 and September 2009, far lower than any other region, and saving buyers just £9.4m.

But certain areas within commuting distance of London still offer the opportunity to take advantage of the stamp duty holiday before it expires at the end of the year.

Basildon in Essex tops the list of places where buyers have benefited over the past year with 58% of purchases in the stamp-free price bracket.

Nicholas Leeming, commercial director of Zoopla.co.uk, said: “The Stamp Duty holiday has so far failed to reinvigorate the housing market.”

However, the NAEA has launched a campaign to extend the Stamp Duty break, and also to have the entire system and its thresholds reviewed.

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    Experts warned the end of the suspension of Stamp Duty on homes costing up to £175,000 would stop some first-time buyers from getting onto the property ladder. The Stamp Duty threshold is due to return to £125,000 at the end of this year.

    As many as 132,000 first time buyers have benefited from the Stamp Duty holiday during the past year, according to the Council of Mortgage Lenders, while separate figures from property website Zoopla.com suggested house buyers in Basildon and Dagenham have benefited the most, with 58 per cent of purchases falling in the stamp-free price bracket in each area.


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    Stamp Duty in the Budget 2009 Nicholas Leeming, Commercial Director, Zoopla.co.uk, said: “Rather than ending the stamp duty holiday, the government should seriously consider extending it by making first time buyers permanently exempt and by giving others the ability to defer payment for up to say five years.”

    Property buyers in London have benefited least from the Stamp Duty holiday, where average values of £375,000 are almost double the national average. Only 13 per cent of sales in the capital benefited from the tax relief during the year to September, according to Zoopla.

    Mortgage experts also suggested only charging Stamp Duty on the amount of purchase price above the threshold rather than the whole purchase price.

    It would mean someone buying a £350,000 property would pay Stamp Duty of £4,250 – zero per cent of the first £125,000, 1 per cent of the next £125,000 and 3 per cent of the next £100,000 – rather than 3 per cent of £350,000 or £10,500 under the current arrangements.

    Nigel Bedford, of mortgage brokers largemortgageloans.com, said: “I am sure that the increased level of purchase transactions, greater cash left in buyers’ pockets and the greater feel good factor would actually translate into increased spending on the high street to benefit the economy as a whole.”

    He calculated first-time buyers had benefited by £1,650 based on a 1 per cent of the average property price of £165,000.

    It comes as gross mortgage lending rose by 5 per cent last month from £12.9 billion in September to £13.5 billion, although it is still down 27 per cent on October last year, the CML said.

    Andrew Montlake, director of mortgage brokers Coreco, said: “There has been a noticeable rise over the Autumn months in the number of first-time buyers applying for mortgages. There is clearly an appetite to buy before prices become further out of reach.”

    • 21 November 2009 17:11 PM
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