Stamp duty on homes is axed
Tuesday, 2 September 2008
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Northern Ireland’s beleaguered housing market was today given a major boost after Chancellor Alistair Darling removed stamp duty from home purchases worth less than £175,000.
These homes are to be exempted from stamp duty for 12 months as part of a package to revive the housing market.
The change, which comes into effect tomorrow, raises the threshold on which 1% stamp duty is paid by £50,000 from its current level of £125,000.
The move will save eligible home-buyers up to £1,750 when they purchase a property, and relates only to buildings entirely for residential use.
In a statement, the Treasury said: "The Chancellor of the Exchequer has today announced that stamp duty land tax will not apply to purchases of residential property of £175,000 or less.
"This will provide an exemption from stamp duty land tax for land transactions consisting entirely of residential property where the chargeable consideration is not more than £175,000.
"This relief will apply to transactions with an effective date on or after 3rd September and before 3rd September 2009."
Halifax, the UK's biggest mortgage lender, welcomed the Government's announcement.
"We welcome the Government's stamp duty initiative. This is a sensible measure and it will help the housing market," as spokeswoman said.
But the Council of Mortgage Lenders said the move did not go far enough.
Spokeswoman Sue Anderson said: "While any initiative to try to help the housing market is welcome, this particular move doesn't go far enough in terms of the starting threshold and it is also getting close to the £250,000 threshold.
"The level of transactions this year is lower than last year and, while it means that around 40 per cent of transactions won't be caught (by stamp duty), it is questionable whether it will incentivise buyers who wouldn't have entered the market anyway."
The plan for a stamp duty freeze first emerged last month but was met by official silence — leading to claims that the housing market had been paralysed by dithering between the Treasury and Downing Street.
The Chancellor’s move comes as Social Development Minister Margaret Ritchie attempted to give the local housing market a leg-up with a new pilot proposal aimed at first-time buyers.
The scheme — Own A Home — is a joint initiative between the government and Portadown-based builder Turkingtons, local housing associations’ Clanmil Housing and the South Ulster Housing Association, and Barclays bank.
And the move — coupled with today’s announcement on stamp duty – could play a major part in helping beleaguered first time buyers across Northern Ireland enter the housing market during the current climate of economic gloom and falling house sales.
Miss Ritchie said: “As part of the New Housing Agenda I want to increase the supply of affordable housing. This scheme, a first in Great Britain and Ireland, does that, but it is just a start.”
An RICS spokesman described the housing market as “on its knees” with its research pointing to the worst house sales levels in 30 years.
Under the scheme buyers will not have to stump up a deposit — which for first time buyers is usually in the region of £5,000.
House-hunters will also be able to purchase 50% of the property’s value through a 100% mortgage from Barclays.
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property prices have been falling for over a year now and at the moment they are around the levels seen approaching mid-2006, or at least those vendors who have priced their properties reallistically are around those levels. If we project the slow, steady sustainable increases in the few years prior to the boom through to the present day, these are the sort of prices we should reasonably expect to see, around 25%-30% lower than the peak of the boom in early 2007. This is why I think that the only further substantail decreases in prices should be on those houses that are currently on the market and overpriced (which are too many at the moment!!). The big picture is that demand for housing exceeds supply in Northern Ireland which will always mean that prices will not fall catastrophically and that the last 14-16 months has been a period of correction. This i think is a good time to buy as the early 2007 peak will, in the fullness of time be exceeded.
Posted by Rob | 03.09.08, 16:25 GMT
I hope that the developers, estate agents and other vested interests read all of the comments to this article. They will not fail to note that they are all saying the same thing! We first time buyers are not stupid, we know the unsustainable buy to let bubble has burst, we know Mr Brown isn't interested in our interests, if he had have been he would have reined the market in on the way up, not in its crash! We know that the longer we hold off buying the larger the falls will be! And we have every intention of doing so. Revenge, as they say, is oh so VERY sweet!
Posted by Jack | 03.09.08, 00:57 GMT
This is just window-dressing. The government need to be seen to take action, thats all. It'll make no difference to the housing market. Prices will contine to fall until it becomes attractive to buy instead of rent. This means a further 30% decline in prices over the next 2-3 years.
Posted by Bob | 02.09.08, 19:36 GMT
I smell panic The dithering duo of Darling and Brown have not given enough thought to the problem you need to have incentives all the way up so that home owners over 175000 value will move thus avoiding a bottle neck effect at houses above 175,000. The levels should be no stamp duty under 200,000 1% from 200,001 to 350,000 2% 350,001 to 500,000 3% 500,001 to 650,000 and 4% over 650,001. this would give a boost to the whole industry.
Posted by P | 02.09.08, 17:28 GMT
Why bother buying now when the stamp duty holiday runs for a year. With house prices dropping at 2% a month you could save yourself the stamp duty plus at least 20% on current pricing levels if you wait 10 months. A tidy saving when money is tight. You'd be mad to buy now - we're on the verge of a recession. There is absolutely no need to buy now - don't get caught in the classic bull trap.
Posted by paul65 | 02.09.08, 16:08 GMT
exactly if £1,750 is going to make a difference to you buying a house or not then you are not in a position to buy it full stop.
For three years I tried to buy a house always out bidded by investors buying up houses and buying tens of houses on new housing estates - developers and banks allowing this to happen have definately shot themselves in the foot. I hope the developers do not get a penny for their greedy approach to selling houses over the past years and by creating a false economy in the housing market.
I have negative equity on my house - i purchased off an investor who bought 7 houses on the same developement. I am sittingg with negative equity no one is going to help me, why help the developers.
Posted by negative eq. | 02.09.08, 15:39 GMT
It didn't stop price falls when the Tories suspended stamp duty in 1991 and it's not going to make a difference now - prices in the UK fell by 8% during that period of SD relief (according to an article on Bloomberg today).
Still, the government needs to be seen to be doing something if it is to get re-elected, even if what it does makes little difference.
Posted by MC | 02.09.08, 13:33 GMT
This will not work. House prices here are way too high when looking at our average wages in Northern Ireland. House prices will need to fall and hard times will have to be experienced by all. More developers will probably have to do what Fraser did. Smart move by them by the way. Cash not debt is finally important again.
Posted by Richard | 02.09.08, 13:17 GMT
I can't agree more with the first post. A joke. House prices need to fall further to be affordable. The removable of 1% won't make much of a difference.
Posted by Ken | 02.09.08, 12:12 GMT
What a joke. A maximum saving of £1,750? If this paltry sum is the deal breaker for a potential house buyer then they can't afford the house, end of story. And won't this sum be taken by the govenment anyway at the end of the 12 month stamp duty holiday?
As for house builders crying poverty, these same people were bleeding buyers dry just before the end of the boom, even inviting bidding wars for off-plan houses? They should be given no 'leg-up', Margaret Ritchie's proposal will make the rich richer, nothing else.
Posted by John | 02.09.08, 12:08 GMT
With some sources reporting average house prices falling at around 2% per month I don't think scrapping a 1% tax will make a massive difference. Just wait a month more to buy the house!!
Posted by stephen | 02.09.08, 12:07 GMT
this holiday on SD is a joke. House prices have to fall to afforable levels- end of.
Posted by ex-belfast buyer | 02.09.08, 11:37 GMT