Stamp duty threshold doubles for first-time buyers
Such a move will save an estimated 73% of first-time buyers from having to pay this tax.
Properties bought for less than £125,000 are currently exempt from stamp duty, while buyers of property between £125,001 and £250,000 have to pay 1%.
On 2 September 2008, Darling introduced a stamp duty ‘holiday’ that saw the 0% threshold temporarily raised from £125,000 to £175,000. This lasted until the end of December 2009.
Raising the threshold to £250,000 would help 350,000 households buying properties this calendar year, according to the Council of Mortgage Lenders.
This would add to the 220,000-odd households currently expected to be exempt from paying stamp duty in 2010 - and would mean that around two thirds of all transactions would be exempt.
However, the cost to the government is expected to be between £630 and £750 million. The move will be paid for by increasing the rate of stamp duty on properties worth £1 million or more to 5%.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, says: "Measures to help boost the housing market are welcome and will benefit a significant number of buyers, removing 50% of transactions from the stamp duty system."
But Jonathan Moore, director of easyroommate.co.uk, says that while raising the stamp duty threshold would help first-time buyers it doesn’t address the problem of mortgage availability.
“First-timers simply can’t borrow enough cash to buy a home,” he adds.
The impact of a 5% rate of stamp duty on properties worth £1 million or more will be minimal, says James Hyman, partner for residential sales at property consultants Cluttons.
“Raising the stamp duty threshold to 5% for properties over £1million is unlikely to dampen demand at this level of the market as a 1% increase will make little difference to buyers who tend to be less price sensitive,” he adds.
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.