Stamp tax holiday coming to an end

Estate agents have reported a surge of interest from potential buyers as the end of the Government's stamp duty holiday looms at the end of 2009.



Countrywide Estate Agents, which has more than 1,000 branches across the UK, said it had seen a 69% increase in inquiries from potential buyers during August, compared with the same month of 2008, and a 53% rise in sales.

Some of the increased activity is likely to be due to growing evidence that house prices may have passed their trough, causing people to want to take advantage of recent price falls before the cost of property rises again.

But the group, whose brands include Bairstow Eves and Mann & Co, thinks people looking for properties under £175,000 are also been spurred on by the end of the stamp duty holiday for homes costing up to this level.


The Government announced in September 2008 that it was increasing the threshold below which stamp duty is not charged from £125,000 to £175,000 for one year, later extending the exemption until the end of 2009.

Some 60% of buyers currently purchase a property for less than £175,000, but as it typically takes three months to buy a home from start to finish, people wanting to take advantage of the higher threshold need to act fast and now, if possible. House purchases can take months to complete and it is now make-your-mind-up time for those considering buying a property for £175,000 or less,.


As the best deals are going to mortgage customers with a deposit of around 25 per cent, the discount worth as much as £1,750 could be a big help to some buyers.


With house prices now holding up more strongly and in some cases rising, the stamp duty holiday will prove to act as a greater incentive as the deadline approaches.


There has been speculation that the government will extend the deal to further boost the mortgage market but this cannot be relied upon.


If they do change it, hopefully they tier it properly so everyone ends up paying an equal value.


Currently, stamp duty is divided into tiers from under £175,000, between £175,000 and £250,000, between £250,000 and £500,000 and above £500,000. The rates are zero, one, three and four per cent respectively.


Some have long called on the government for a fairer system of stamp duty, where fixed thresholds are replaced with a more fluid set of charges – so preventing artificial price levels at each stamp duty threshold.


Any changes – or an extension to the stamp duty holiday – will come in the chancellor's pre-Budget report expected this autumn.