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CML calls for extended FTB stamp duty holiday

CML calls for extended FTB stamp duty holiday

Category: Mortgages

Updated: 16/11/2011
First Published: 16/11/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Council of Mortgage Lenders (CML) has called for the stamp duty holiday for first time buyers to be extended.

Currently, first time buyers are exempt from paying stamp duty on properties worth up to £250,000 – an initiative that was introduced in a bid to give the property market a much-needed boost.

However, the holiday is scheduled to come to an end at the end of March 2012.

Analysis conducted by the CML shows that when the previous stamp duty holiday came to an end on December 2009, there was a slump in sales.

The association is worried that the planned end of the stamp duty holiday could have the same effect – a result it said would be 'unhelpful, given the fragile state of market confidence'.

The CML is arguing that the concession itself is likely to be costing the Government only a modest sum in foregone revenue as a result of the relatively low number of transactions in the market at present.

In fact, just 13% of funds created by stamp duty come from properties worth under the £250,000 mark.

There is a danger that money gained by the reintroduction of the stamp duty could be offset by negatively influencing consumer confidence and pulling transaction numbers down yet further.

"While there is no clear evidence that the stamp duty concession has incentivised an increasing number of first-time buyers to buy, it is highly likely that there would have been fewer of them if it had not been in place," said Paul Smee, director general of the CML.

"The CML believes it would be a mistake to pull the plug on the concession - at least until the housing market returns to a firmer footing.

"First-time buyers need to get the message that the Government supports them as they take their first steps into a housing market where confidence needs to be restored.

"The housing market can act as a force for growth in the economy, but if this is to happen then buyers, lenders and builders alike all need a clear message that the Government sees them less as part of the economic problem, than as part of the economic solution."

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