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Call to prolong stamp duty holiday

Call to prolong stamp duty holiday

Category: Mortgages

Updated: 09/10/2009
First Published: 09/10/2009

MONEYFACTS ARCHIVE
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The Government has been urged to extend the duration of the stamp duty holiday, if the recovery in the housing market is to be sustained.

Since September last year, a temporary stamp duty threshold of £175,000 has been in place, up from the usual level of £125,000, as part of the Government's attempts to encourage people to move, and reinvigorate what was a struggling housing market.

It is a strategy that appears to have proven successful. Indeed, according to the National Association of Estate Agents (NAEA), demand for property returned to the housing market in September, particularly among first time buyers.

However, with the temporary increase due to expire and the normal threshold of £125,000 set to return from the end of 2009, the president of the NAEA, Gary Smith, speaking to Moneyfacts.co.uk, said it was important not to assume it will be plain sailing from here.

"This needs to be maintained rather than taken for granted. It is a slow and gradual road of recovery and it is at this point where the promising signs we're seeing need to be further supported to ensure that the momentum doesn't stall."

As to how to ensure the positive impetus is not lost, Smith said both lenders and the Government had to do more to help facilitate the second phase of the recovery.

"A key decision will be made in the Pre Budget Report later this year, and the Government should consider extending the stamp duty holiday in the same way as it has done with the car scrappage allowance scheme," he added.

"As first time buyers are usually the foundation of sales chains, extending the current stamp duty holiday will be heavily outweighed by additional stamp duty and VAT revenues generated further up the chains."

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