The Inside Edge
The BBC has reported that the Treasury has moved to clarify their stance on Stamp Duty in response to media and political speculation that some kind of tax break is being considered to help the struggling property market. Earlier in the week in a letter to the chancellor, shadow Treasury spokesman Philip Hammond claimed that Labour’s dithering over the issue had undermined the housing market at a historically low point, by “creating a significant incentive for people to delay house purchases”.
And he demanded that Darling end the uncertainty over the matter, pledging cross-party support if Labour were to adopt Conservative plans to lift the Stamp Duty threshold for first-time buyers to £250,000.
The Treasury’s response was quoted by the BBC:
“Recent news stories suggesting the government has put forward a proposal on stamp duty are simply wrong. These stories are based on speculation.
“As has been said on many previous occasions, the government has made clear that there are a number of options we will need to consider to help businesses and people get through what is undoubtedly a difficult time.”
The government have been forced to issue a statement as their previous refusal to rule out a Stamp Duty tax break has lead to intense media and industry speculation which in turn has encouraged buyers to hold off from completing transactions in case they miss out on a possible tax break.
The statement is a fairly ineffective measure to reassure buyers that nothing immediate is happening in order to keep the market moving, and doesn’t rule out help in the medium term.
First Time Buyers: If you’re in no rush to buy it may be wise to wait and see what happens in the next few months (to house prices as well as Stamp Duty) – but if you’ve found a good buy and have budgeted cautiously then there is a case to move ahead regardless. There will always be some uncertainty in the market, whether it be house prices, interest rates or government intervention.
Stamp duty is paid by the buyer at the time of completion, the rate varies according to the value of the property.
Current rates are:
£125,000 to £250,000 pay 1%
£250,000 to £500,000 pay 3%
Over £500,000 pay 4%