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Is Brown set to scrap stamp duty?
By Liam Tarry
Gordon Brown is thought to be considering a temporary suspension of stamp duty in an attempt to kick-start the flagging property market and spur the economy.
The ambitious plan would be part of a raft of new measures aimed at helping thousands of hard-pressed families who are struggling with the rising cost of living, and unable to contemplate purchasing a new home.
Stamp duty is currently paid at 1% on all homes above £125,001 - £250,000, 3% from £250,001 - £500,000 and 4% for all homes above £500,000. With the Nationwide estimating that the price of an average house is currently £169,316, this means homebuyers need to find £1,693 - on top of all their other expenses such as solicitor's fees and surveys.
In an interview on BBC Radio 4's Today programme, chancellor Alistair Darling refused to rule out suspending the property tax. "I am looking at a number of measures and I am not going to be drawn on that today because we have not concluded what exactly we need to do," he said. "It is helping people that is important. I want to look at a range of options that will help people."
Unsurprisingly, the property industry has welcomed the proposal as a means of giving the struggling housing market a temporary boost. Gillian Charlesworth, a director of external affairs at the Royal Institution of Chartered Surveyors (RICS) believes a stamp duty holiday is a good start. "After having mortgages pulled from beneath their feet from lenders facing the full brunt of the credit crunch, the Government certainly needs to help consumers."
However, Nicholas Leeming, director of propertyfinder.com, believes that public finances could not sustain a full suspension for long. "The market needs long-term, sustainable reform of stamp duty - starting with redistribution upwards of the tax bands to really stimulate the bottom end of the market."
RICS recently proposed abolishing the controversial tax for all homes under £125,000, replacing it with a two-tiered system. A 2.5% charge would be applied for homes up to £250,000, with a 5% rate applying on homes in excess of this threshold, unlike the current system. This, RICS believes, would lead to a significant increase in housing transactions and would allow the Government to help first-time buyers at the same time.
According to official figures, stamp duty has earned the Treasury £31.5 billion over the past 10 years.
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