Property industry calls for Stamp Duty holiday extension

The UK residential property market could be hit by a double whammy in the New Year when the stamp duty holiday that has saved real estate buyers thousands of pounds comes to an end along with expected increases in interest rates and other taxes.

The Stamp Duty threshold where the tax is payable is due to be lowered from £175,000 to £125,000. So a first-time buyer looking at a property with an average price tag of £160,000 will have to fork out a £1,600 Stamp Duty bill from January 1, whereas at the moment there is no tax to pay. In addition, VAT is due to return to its former level of 17.5% and economists have indicated that interest rates could rise next year.

Now sectors of the real estate industry are urging the government to think about keeping property and other taxes low in order to help what many perceive as the start of a housing recovery. They regard the stamp duty holiday as being a measure that helps buyers to such an extent that it should be extended.

‘The stamp duty holiday has saved property buyers thousands of pounds in taxes,’ said Paul Smith, chief executive of national estate agency group Haart.

‘As house purchases can take months to complete it is make-your-mind-up time for those considering buying a property. With house prices now holding up more strongly and in some cases rising, the stamp duty holiday will proves to act as a greater incentive as the deadline approached,’ said David Hollingworth, head of communications at L&C mortgages.

Others agree. ‘It would be nice for them to leave it at the current level. It would benefit the market. Look at how it’s changed. If they do change it, hopefully they will tier it properly so that everyone ends up paying an equal value,’ said Peter O’Donovan, head of mortgages at BestInvest.

Currently, stamp duty is divided into tiers from under £175,000, between £175,000 and £250,000, between £250,000 and £500,000 and above £500,000. The rates are zero, one, three and four per cent respectively.

Members of the property and mortgage industries have long called on the government for a fairer system of stamp duty, where fixed thresholds are replaced with a more fluid set of charges, thus preventing artificial price levels at each stamp duty threshold.

If UK ministers do decide to make a change it is likely to be sooner rather than later and announced in the Chancellor’s pre-budget report due in the autumn.


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