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.