Blanchard Consultancy – the independent construction consultant

The Government's dithering over its position on stamp duty prompted a drop in the number of homes sold last month, according to the National Association of Estate Agents.

Sales per estate agent fell to just five on average in August, down from six the previous month and half the number of that in August last year.

Estate agents said the slump was due to buyers stalling before clinching the deal, as they held out to see what would happen with stamp duty.

More than nine out of 10 agents polled by the NAEA said government dithering had led to greater uncertainty.

Chris Brown, NAEA president, said: "August was...a month of indecision and this evidently has had a profound effect on the market, as many consumers adopted a 'wait and see' attitude while waiting for a decision from the government on stamp duty."

Reports last month that the Government was planning a temporary suspension of stamp duty on all house purchases were neither confirmed nor denied by officials.

Read more at Telegraph property news

Labels: Housing market, National association of estate agents, Stamp duty changes

In the past decade, home buyers have paid the government £32bn in stamp duty, with the annual amount rising dramatically as the housing market soared and increasing numbers of properties were caught by the tax.

According to the Halifax, just over a quarter of the privately-owned homes in the UK, more than 5.5m, were valued above £250,000 at the end of last year, the threshold at which stamp duty is levied at 3% of the property's value. In 2002, there were just 1.8m properties valued above £250,000.

A family buying the average-priced home in Greater London, currently £291,500, would pay the Treasury £8,745 in tax.

The government has enjoyed a large increase in revenue from stamp duty since Labour came to power in 1997. That year, the yield from residential properties was just £675m. Increases in the rate of tax combined with the impact of rising house prices meant the Treasury collected £6.4bn from stamp duty on homes last year. However, that figure will fall dramatically this year as the housing market has hit a wall and the number of transactions has plummeted to record lows.

Under the current regime, there are four stamp duty bands. Buyers of homes worth less than £125,000 pay nothing. Between £125,000 and £250,000, buyers pay 1% on the price of the home; between £250,000 and £500,000, buyers pay 3% of the price; and above £500,000, they pay 4%. There were 1m properties in the UK valued at more than £500,000 at the end of last year, a threefold increase in the past five years, according to the Halifax.

Consumer groups, mortgage lenders and house builders have lobbied for the lifting of the current thresholds to keep them in line with rising house prices, and those calls have become louder as the housing market has been paralysed by the credit crunch. First-time buyers are under particular pressure as the banks' lending criteria have become tougher and they are being forced to find much larger deposits.

If the higher stamp duty thresholds of £250,000 and £500,000 had increased in line with house price inflation since July 1997 when they were introduced, they would now stand at £720,000 and £1.44m, the Halifax said.

Read more at Guardian Economics

Labels: Alistair Darling, Bank of England, credit crunch, Gordon Brown, Halifax, House Tax, Mortgage rates, negative equity crisis, property analysis, Stamp duty changes, uk housing

The chancellor, Alistair Darling, is prepared to disappoint millions of would-be home buyers by ruling out proposals to revive the housing market, Treasury insiders warned last night. After a chaotic week of claim and counter-claim about Treasury plans to suspend stamp duty for first-time buyers, Darling has hardened his stance against the move, which he believes could cost billions to little positive effect.

Senior officials said the Chancellor might well take no action to prop up the market in the Pre-Budget Report this autumn. 'Alistair is not going to be buffeted into doing something by headlines,' said one insider. 'If the evidence is there that suspending stamp duty would help, then we will look at it. But at the moment the evidence is not there.'

Although work is under way on a range of options involving possible changes to stamp duty and other measures to help buyers, there is deep scepticism about the idea in the Treasury.

Read more at Guardian Online

Labels: Alistair Darling, chancellor, House market, property analysis, property prices, Stamp duty changes

The UK Government must overhaul stamp duty land tax radically to create a fairer system for consumers, says RICS (Royal Institution of Chartered Surveyors). Proposing a system that would benefit 99 percent of home buyers, RICS called on the Government to find a way of implementing the policy, which will provide a boost to the economy and the faltering housing market.

RICS proposes the abolition of the existing slab tax system*, replacing it with a two tier marginal tax system. No one will pay stamp duty on the first £150,000 of a house price. Above this value a 2.5 percent marginal rate would be charged on every pound up to £250,000, with a 5 percent marginal rate applying to every pound thereafter.

Everyone purchasing a home under £1 million will pay less stamp duty, benefiting 99 percent of all prospective homeowners. Currently, a buyer looking to purchase a £270,000 property will pay £8,100 in stamp duty. Under the RICS proposal they will now pay only £3,500, a saving of £4,600 making the property market more accessible, especially for those first time buyers struggling to pull together the funds needed to get on the property ladder.

With transaction levels plummeting first time buyers have been hardest hit seeing their home ownership dreams evaporate. With long-term house price rises outstripping wage inflation, food and fuel bills rising, and tighter lending criteria being applied by mortgage companies, the residential property market is becoming more inaccessible.

RICS Director of External Affairs, Gillian Charlesworth said:

“After having mortgages pulled from beneath their feet from lenders facing the full brunt of the credit crunch, consumers are looking to the Government for help. HM Treasury needs to find a way to implement this policy or, if they can’t do this imminently, to introduce a stamp duty holiday that will get the market moving.”


Initially the RICS proposal will reduce Government revenue by up to 24 percent, but given the 40 percent rise in stamp duty revenue in recent years (up from £4.6 billion in 2005/06 to £6.45 billion in 2006/07) there is room for the Government to manoeuvre.

The RICS proposal for Stamp duty land tax

• Slab tax system reformed to a two tier marginal tax system that reduces barriers to vast majority of homebuyers moving onto or through the market
• No-one pays SDLT on first £150,000 of home purchase
• 2.5 percent marginal rate on the value of homes between £150,000 and £250,000
• 5 percent marginal rate on the value of homes over £250,000
• The thresholds for stamp duty rates should then be annually indexed, reflecting house price growth and inflation
• Everyone purchasing a home up to £1million would pay less stamp duty
• Purchasers of the most expensive homes would pay more stamp duty. However, the increases are relatively minimal – the SDLT bill on a £1.5m home would only be 8% higher in total (£5,000 extra).
• Government would initially lose up to 24 percent of revenue.

Read more at the RICS newsroom

Labels: House market, land tax, property analysis, RCIS, Stamp duty changes, uk housing