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Stamp Duty holiday helps almost 75% less than predicted

Friday 20th November 2009

The Stamp duty holiday implemented last September, at the height of the property downturn, has helped 115,447 UK homebuyers, which is less than a quarter the Government predicted.

Between the start of the scheme on 2 September 2008 and 1 September 2009, property buyers saved GBP 173 million, compared to the GBP 600 million forecast by the government.

The scheme raised the level at which Stamp Duty is payable at one per cent from GBP 125,000 to GBP 175,000 temporarily in an attempt to boost the housing market and first-time buyers. The average saving for each home buyer was GBP 1,498 nationally, according to figures from Findaproperty.com.

Property website Zoopla said extending the tax break to the end of 2009 is likely to benefit an additional 37,500 buyers over four months saving consumers a further GBP 61 million.

Meanwhile, fewer property transactions has hit Treasury revenues hard with just GBP 2 billion from stamp duty in the 2009/10 tax year compared to almost GBP 6.5 billion in 2006/07.

Property buyers in London have benefited least from the stamp duty holiday because property values, at GBP 374,284 are typically twice the national average. Only 13 per cent of transactions in the capital were affected by the relief, saving consumers GBP 9.4 million, far less than any other region.

Basildon tops the list of places where buyers have benefited over the past year, said Zoopla, with 58 per cent of purchases in the stamp-free price bracket.

Nicholas Leeming, spokesman, Zoopla.co.uk, said: “The stamp duty holiday has so far failed to reinvigorate the housing market in the way that the government predicted.”
He added: “Rather than ending the stamp duty holiday, the government should seriously consider extending it by making first time buyers permanently exempt and by giving others the ability to defer payment for up to say five years.”

Figures suggest 38 per cent of all properties for sale cost less than GBP 175,000, but a further 23 per cent are priced between GBP 175,000 and GBP 250,000. FindaProperty.com called for all properties worth up to GBP250,000 to be exempt to benefit first-time buyers in the South East.

Michael O'Flynn, director of FindaProperty.com, said: "The stamp duty tax holiday cost the Treasury an estimated GBP 200million in the first 12 months - a mere 0.1 per cent of the amount spent bailing out the banks at GBP 175 billion."

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