Stamp out stamp duty - temporarily

August 5th, 2008

The housing market is being hit hard by the credit crunch. There were reports recently that UK house prices have fallen by 8.1% over the last year and 1.7% in July alone. This is the biggest annual fall since the Nationwide began its housing survey in 1991, according to The BBC website.

Today there were more worrying reports as The Times and The Telegraph both report that repossessions are up by 40% in the first three months of 2008. More than 300,000 are in arrears on their mortgage payments.

The Financial Services Authority reports that 9,152 people had their homes repossessed in January to March of 2008. This compares to 6,471 during the same period in 2007. The Council of Mortgage Lenders is predicting that this will rise to 45,000 by the end of the year.

So with all this crisis, what are the Government going to do to save the housing market and give consumers more confidence. Well one of the ideas is to defer stamp duty. Alistair Darling says that he is looking at a number of measures to help people but was reluctant to talk specifically about stamp duty. During the 1991 recession the Conservative government decided to temporarily suspend tax on homes worth less than £250,000. Currently homes up to this value would incur a 1% stamp duty fee.

Personally I think that this would be a great idea and may go someway towards helping to kick start the housing market again. Someone buying a house worth £260,000 would currently also need to find £7,800 just for the stamp duty. That is a lot of money to find, along with removal fees, solicitors fees and other costs. It is worth remembering though that the fee would have to be paid at some stage but at least it gives the buyer time to save a bit more.

At the moment Alistair Darling is remaining tight lipped on the subject but I am struggling to think of an alternative action.

Entry Filed under: politics, house and home