Help for homeowners?
People buying properties for under £175,000 will continue to benefit from the stamp duty holiday until the end of this year.
Chancellor Alistair Darling included the measure in his Budget as a means to help first-time buyers onto the housing ladder during the economic downturn. In September last year, stamp duty was temporarily scrapped on all properties under £175,000 until 3 September 2009.
The move, which gives people an extra three months to take advantage of the holiday, has left estate agents unimpressed.
Keshav Thukaram, managing director of smartlandlord.co.uk, says the government would have done better to scrap stamp duty for first-time buyers altogether.
”The chancellor’s extension of the stamp duty holiday might encourage a few more first-time buyers back into the market, but could result in gridlock when it returns next year,” he explains. “False starts won’t help anyone and the market needs real reform to get it back on its feet.”
Peter Rollings, managing director of estate agent Marsh & Parsons, remains unconvinced that extending the stamp duty holiday by just three months will do anything to help the housing market or buyers.
“A stamp duty holiday until the end of 2009 isn’t going to boost the market – the dwindling number of mortgage approvals over the past year is proof that it didn’t make a difference in September when it was first introduced,” he says. “The government needs to think long-term – sticking plaster over sticking plaster isn’t going to heal a wound that needs stitches.”
One of the major problems affecting homebuyers is the lack of mortgage credit.
In his Budget, Darling said that government bailout measures have already helped banks lend more to consumers. He also unveiled new plans for the government to help banks remove toxic debt from their balance sheets by offering insurance guarantees to mortgage-backed securities.
Mark Blackwell, sales director at property and mortgage outsourcing specialist Xit2, welcomes the move: “The Budget announcement that new mortgage-backed securities will be underwritten from 22 April 2009 should reopen wholesale funding markets for good quality lending.”
Other Budget measures to help boost the housing market and homeowners include extending the Support for Mortgage Interest scheme for people who have lost their jobs by six months.
Darling said: “Last year, I increased and extended the Support for Mortgage Interest scheme, which covers mortgage interest payments for people who have lost their jobs. Today I will maintain the higher level of support for a further six months to help homeowners as they look for a new job."
He also pledged to pump an additional £80 million into the government's shared ownership HomeBuy scheme.
To help the government meets its targets for new homes, and to offer support to the construction industry, Darling used the Budget to announce a £500 million package for house-building, with 1,000 new homes created. Of this, £100 million will be funneled towards local authorities to use towards ‘green housing’ schemes.
Restraints on house-building, such as planning permission, will also be eased, Darling said. And £50 million of funding will be used to improve accommodation for the armed forces.
What Darling said:
“The recession and the credit crunch have made it much harder for people to take their first step up the housing ladder. This is not just difficult for those involved – but also undermines the entire housing market.
“So, to help, I have decided to extend the stamp duty holiday on properties sold for less than £175,000 until the end of the year.
“60% of residential properties will continue to be exempt – encouraging modest and middle income homebuyers.
“I can also announce an £80 million extension to HomeBuy Direct – the government shared equity mortgage scheme, which has already received interest from over 32,000 people since September.
“Altogether, additional support for those who lose their jobs and new help for people to get on the housing ladder.
“[…]the strength of our economy, and health of our society, also depends on meeting long-term demand for housing. I have two measures to help achieve this.
“First, we want to work with the industry to tackle the restraints, which house-builders have told me, could prevent them from acting now to increase housing supply. This will give construction firms more certainty and help them meet housing demand more effectively.
“Second, lack of finance now is affecting house-builders and preventing the long-term investment that we need.
“So today I can announce £500 million of extra financial support.
“It will kick-start building on housing projects, stalled because of the credit crunch, delivering thousands of new homes.
“As part of this support, we are providing £100 million for local authorities to build new energy-efficient housing.”
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.