Stamp duty threshold doubled

Published 24th Mar 2010

In the 2010 UK Budget announced today, the Chancellor of the Exchequer, Alistair Darling, doubled the tax free threshold for stamp duty on residential properties to £250,000 for first time buyers until the end of 2011...

This incentive, aimed at boosting the struggling UK housing market, comes after the temporary extension last year from £125,000 to £175,000 which ended on 31st December 2009. The stamp duty charge for property purchases over £1 million will increase from 4% to 5%. The Chancellor explained this change is aimed at helping fund the support given to first time buyers.

The stamp duty cut is similar to Tory policy, so will likely stay in place whoever wins the General Election.

In his Pre-Budget Report in December, the Chancellor decided not to extend the stamp duty holiday, returning it to the £125,000 limit. Some analysts claimed the move halted the recovery in the housing market.

The Council of Mortgage Lenders has estimated that if the £250,000 threshold had existed in 2009, 92% of first-time buyers and 69% of movers would have been exempt.

James Thomas, Head of Residential Investment and Development at Jones Lang LaSalle, said, "The extension to the stamp duty threshold is positive news for the UK housing market. This incentive will provide a much needed stimulus to the market at a time when first time buyers are struggling to raise deposit monies. The underlying economic conditions, in conjunction with a predicted rise in unemployment, is likely to dampen price growth and the concern of rising interest rates later in the year will continue to weigh on the market.

"The extension to the stamp duty threshold should motivate and support other buyers looking to upscale through the market. However, the 50% tax rate on high earners which comes into force next month and the one off bonus tax windfall is likely to feed through and impact the prime central London residential market, as is the increase in stamp to duty to 5% on properties purchased over £1 million," he added.

Nigel Lewis, Property Expert at FindaProperty.com, added, "We applaud this much sought after change to the stamp duty threshold which will not only benefit first time buyers but, because the property market is cyclical, will also benefit those at other stages of the property ladder in many regions. This is a significant move which will aid the ongoing property market recovery into 2010 and beyond and make a significant difference to the affordability of first time buyers."

Stamp duty on residential property sales over £1m to increase to 5% from April 2011

Source: ' 'TMC' '

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