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Stamp duty holiday helped over half of buyers

Stamp duty holiday helped over half of buyers

Category: Mortgages

Updated: 31/12/2009
First Published: 31/12/2009

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 It is now over 6 months old so the content may be out of date.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 stamp duty holiday on properties priced between £125,000 and £175,000 benefitted almost six in ten homebuyers at its peak.

The temporary concession to raise the nil threshold for stamp duty to £175,000 was announced by the Government last September. The measure has been widely praised, and credited with playing a part in the partial recovery in the mortgage market.

Figures from the Council of Mortgage Lenders (CML) show that 57 per cent of homebuyers benefited from not having to pay stamp duty in the first quarter of 2009, more than the 50 per cent the CML estimated would be better off at the peak of the measure's powers.

A moderate increase in house prices and a shift in the mix of homes purchased brought this down to 51 per cent in the final quarter of the year.

Buyers in the Northern and Yorkshire & Humberside regions have benefited the most, with three quarters of property transactions exempt from stamp duty this year.

London was the location which least benefited from the measure. The notoriously expensive capital saw less than one in five (17 per cent) of homebuyers escaping the stamp duty. The end of the holiday means just two per cent of transactions will be exempt.

The end of the temporary measure has lead to calls for the Government to permanently overhaul the current system.

"The CML continues to believe that fundamental reform of stamp duty is necessary. It is a tax that discourages labour mobility, and its "slab" structure has the effect of causing transactions to "bunch" just under each of the tax thresholds," said James Tatch, senior statistician for the CML.

"While abolition would be the best option, a move to a graduated structure would be an improvement on the current system, even if done on a cost- neutral basis. While the temporary concession was welcome as far as it went, it is disappointing that the government has not sought to implement this desirable reform of an anachronistic tax."

The bands will revert to: zero per cent paid on properties up to £125,000; one per cent paid between £125,000 and £250,000; three per cent between £250,000 and £500,000; and four per cent for more than £500,000.

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