The Chancellor of the Exchequer, Alistair Darling, has today announced that stamp duty land tax will not apply to purchases of residential property of £175,000 or less, effective from tomorrow.
This will provide an exemption from stamp duty land tax for land transactions consisting entirely of residential property where the chargeable consideration is not more than £175,000.
This relief will apply to transactions with an effective date on or after 3 September, and will run for a year.
The level at which the 1 per cent purchase tax has to be paid is to be increased from £125,000. The move will save someone buying a £175,000 house £1,750.
The government estimates that half of all property transactions will now be exempt from stamp duty. Previously, one in three transactions did not attract any tax when the threshold was £125,000.
Responding to the announcement, a Halifax Bank of Scotland spokesperson said: “We welcome the Government’s stamp duty initiative. This is a sensible measure and it will help the housing market.”
A spokesperson for the Nationwide building society said: “Nationwide welcomes initiatives designed to support borrowers and the housing market. We look forward to reviewing these proposals in further detail and are committed to working with the government and the industry on measured responses to the current conditions.”
The Council of Mortgage Lenders (CML) welcomed the measure. However, the CML also urged the government to focus on the mortgage funding markets as much as on consumer-facing initiatives.
CML director general Michael Coogan said: "Essentially this package is directed at the blockages in the housing market for some vulnerable consumers. This is welcome, but until more funding is available we are still some way from restoring long-term stability to the housing and mortgage markets.
"CML members have committed to a range of measures designed to ensure that borrowers who may find themselves in difficulty have good access to advice services that can help them, as well as to alert them in good time to changes in their payments to allow them time to budget or to contact their lender to discuss alternative payment options if necessary.”
However, he added: "The stamp duty concession for properties under £175,000 is something of a curate's egg - good in parts. It will reduce transaction costs for some buyers, which is welcome. But we estimate that around half of all housing transactions will still be caught by stamp duty.
"Over time, the housing and mortgage markets will recover. But in the meantime, the situation is painful for some home-owners, and problematic in terms of balance sheet management for lenders too. We continue to see the funding problems in the mortgage market as a fundamental bar to meaningful housing market recovery. We believe that the focus of the government's attention should be at least as much on market funding as on today's consumer-targeted measures. We will continue to work closely with the government on effective implementation of this package, and on other measures."
James Aitken, of the Law Society of Scotland's tax law committee, and senior associate at HBJ Gateley Wareing, said: "The Society welcomes moves to help housebuyers and sellers and, we hope, will help kick start the housing market but this is essentially a stop gap measure. There is now a huge leap from properties valued at £175,000, on which there will now be no Stamp Duty Land Tax (SDLT), to those people buying properties worth more than £250,000 having to pay an additional three percent, which adds at least another £7,500 to the cost of a property.
"There have been deeper issues with SDLT in Scotland in the five years since its introduction. There is a lack of knowledge of Scots Law and conveyancing in Scotland within HMRC which has created long term problems. The Society thinks the stamp office in Edinburgh needs to be properly resourced or that there should be a link with an organisation such as Registers of Scotland to increase efficiency and ensure that conveyancing in Scotland works properly for all concerned."
One person has commented on this article. 1. Darling announces stamp duty relief for purchases less then £175
C.S-Urquhart, Unregistered It may offer some comfort in certain places but not in Scotland's capital, which despite having posted the first fall in house values since the early 1970's, still has an average house price of around £201,000. This measure may help the first time buyer but what about families? A family home in the capital for £175000 or less? Rare as hen's teeth, more like £300000 or more, still carrying a punitive £9000 stamp duty at the £300000 mark. Another point about this, is unlike a mortgage where you get to pay it of over a term of say 25 years, no such luck with stamp duty, the government wants that paid and paid quickly. I am sure most families could be doing with having another 3% to add to their deposit on a house rathger than having to hand it over to someone when they will never see any ROI from their hard earned cash.
Related news items:
|
