STAMP DUTY

The Stamp Duty holiday for first-time buyers handed out like a big bag of sweets early on in the budget speech on Wednesday will make some people very happy.


It is a shame the two-year holiday hasn’t been extended to all property buyers. But nine out of ten first-timers will avoid paying out up to £2,500 and the pro-first-time buyer lobby finally has something to cheer. The government explained the move would be funded in Robin Hood fashion – taking from the rich to give to the poor - by a five per cent Stamp Duty levy targeting those buying million pound houses.

So, doing some very simple maths, buyers are set to pay Stamp Duty worth £50,005 on a GBP one million property. Or put another way, 20 or more first-time buyers will be funded - with gritted teeth no doubt - by every million pound property owner (do we care).

“The many not the few” as Nick Robinson BBC News political editor said in his first words after the speech was over.

The Stamp Duty rear guard action started the second the BBC broke the story in the morning. Critics are calling the move a political stunt, saying it doesn’t go far enough and also questioning the funding plans.

It’s true that first-time buyers started benefiting from midnight on Wednesday but the extra five per cent Stamp Duty layer is payable in over a year’s time from April 2011. Other problems remain and a world of shenanigans will result from property prices bunching around the thresholds and people desperately and creatively trying to avoid the £250,000 and £1,000,000 property price thresholds.

But you can look at this a different way too. This may be a missed opportunity in some ways, but this is also the first Stamp Duty reform for a long time. The boost this could give to business will hopefully demonstrate that wielded correctly and sensibly, Stamp Duty could be a powerful force for good in the property sector.

The door for more reform is no also open. The industry needs to campaign hard to keep this first-time buyer support in place for all-time, not just two years and keep banging the same old drum on reform of the slab tax in the meantime.

The Association for Mortgage Intermediaries (AMI) Robert Sinclair called the Stamp Duty move political opportunism. He could be right. First-time buyers still have to save up many more thousands of pounds for their deposit to have any chance of getting a mortgage and helping first-time buyers always has a nice electioneering ring to it.

But why should first-time buyers care. A GBP 2,500 hand out will be eagerly snatched up from any political party. It’s GBP 2,500 less to save or borrow - or GBP 2,500 to pay the solicitor or buy furniture with instead of eating dinner from a set of garden chairs for a year because that’s all you can afford.

http://firsttimebuyersupermarket.co.uk/