Stamp Duty Holiday Ends
In an effort to assist the weak housing market a temporary stamp duty holiday was put in place for any property sales under £175,000.This holiday is due to end on the 31st December 2009.
A combination of the higher threshold and falling prices has meant that thousands of house sales have been under the threshold. This has saved home buyers thousands of pounds in taxes and reduced buying costs significantly. With mortgage lenders requiring much larger deposits it has been fortunate that buyers have had more cash to put towards their deposit.
Although there is much debate about the impact of the stamp holiday there is no doubt that it has helped some buyers to scratch together a big enough deposit to secure a mortgage and buy a home.
So what does the future hold?
The thresholds will reset on 31/12/2009 to:
| Up to £125,000 | Zero |
| Over £125,000 to £250,000 | 1% |
| Over £250,000 to £500,000 | 3% |
| Over £500,000 | 4% |
According the Nationwide average house prices now stand at £162,038 which means stamp will now be payable on the majority of house sales.
Recent improvements in the housing market have been driven by cash rich home buyers and a lack of supply. If we are to return to a healthy and sustainable market, transactions will have to increase and “normal” mortgage dependent buyers need to start buying.
Unfortunately mortgage lending is still constrained and many buyers just cannot get together enough cash for the large deposits being demanded. The added cost of stamp duty will put huge numbers of buyers a step further away from being a home owner.
The change in stamp duty could really put the fledgling recovery at risk.
For more information about the home buyers' process read our guide.
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