With the current state of the property market, it would be nice to see some clarity and direction from the the Government regarding possible solutions.
Instead, we get both Alistair Darling the chancellor and Housing minister Caroline Flint both masking things even more confusing for homeowners and potential buyers.
Darling has been accused of making it harder for those of you trying to sell your homes, as it’s been revealed that house prices had fallen by almost 11% in the last year.
The Conservatives, estate agents, mortgage lenders and house builders have all accused Darling of damaging the fragile housing market by querying the future of stamp duty.
In an interview Darling said that he was considering measures that would help people with housing costs. Although he stressed that he had not taken any final decisions, it is believed that he is considering suspending stamp duty on house purchases worth up to £250,000.
Although the proposal was welcomed within the housing industry, experts are now complaining that Darling has given many people a good incentive to put off buying a home until the stamp duty decision is confirmed; possibly in the autumn.
- Government creating uncertainty
Philip Hammond, the shadow chief secretary to the Treasury, said:
"After the biggest annual house price fall since 1992, the last thing we need is a government that is making things worse by deliberately creating uncertainty over stamp duty.”
Hammond's comments were supported by Peter Bolton King, the chief executive of the National Association of Estate Agents (NAEA). According to the NAEA, there is a danger that many of us will try to save a few thousand pounds by putting off buying a house until a firm decision has been made.
It comes at a time when estate agents are reporting their lowest level of sales for 30 years. The impact of the rumours on the market was immediate. Estate agents reported cases of buyers postponing the exchange of contracts because they hoped to save the tax by delaying.
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To add more confusion, Housing minister Caroline Flint confirmed that a temporary 'tax holiday' is an option being considered by the Government. But she insisted there would be no announcement one way or the other until the autumn.
Her comments contrasted with desperate attempts by the Treasury to douse the damaging speculation. In a statement yesterday it said reports claiming that proposals had been put forward were 'simply wrong' although several unspecified options were being studied.
Home sellers and estate agents are begging for an early decision, saying that speculation has caused buyers to pull out. Ms Flint insisted that the Government would not be 'bumped' into clarifying its plans saying:
'There is no decision on it. We are taking a long look at a number of different options but it is about making the right decision and not being bumped into making a decision before the pre-Budget report.'
Confirming that a stamp duty reprieve was a possibility, she went on:
'We are looking at a range of options and stamp duty is one of those options. But the fact is there is no quick solution here. There isn't a decision that can be made this week in August or next week in August that will make the difference that some people are projecting.'
If confirmed, a suspension of stamp duty would save the buyer of an average-priced London home £9,000, creating an incentive to wait. For higher value properties the tax is much more, rising to £32,000 on an £800,000 property.
STAMP DUTY RATES
£0-£125,000: Nil
£125,001-£250,000: 1%
£250,001-£500,000: 3%
Over £500,000: 4%
(Rates are different for properties in disadvantaged areas)
Source: HMRC
What is not clear yet is whether any relaxation of the stamp duty rules would apply just to the 1% band or to the higher rate bands as well.
There is a precedent for a suspension as the Conservatives temporarily suspended the tax on homes worth less than £250,000 during the 1991 recession.
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So, if the Government does decide to suspend stamp duty, will it help the property market ?
Or is it just another desperate measure from a Government that has already run out of ideas?
Why not let us know what you think?