Could stamp duty relief help to boost the housing market?
October 14, 2008
Over the past few months the housing slump in the UK seems to have become more and more pronounced, with estate agents unable to shift many of the properties on their books and with sellers resigning themselves to the fact that even if they do manage to sell their homes it will most likely be at a far lower price than they are asking. The effects of the global credit crunch, the state of the economy, and soaring inflation levels have all affected the low level of property sales over recent months.
Since the global credit crunch the mortgage market has undergone some radical changes, most of which have had an adverse effect for the average buyer. Mortgage rates have been soaring, other borrowing costs such as arrangement fees have rocketed, lenders have made it far more difficult for many people to borrow money, and many have been asking for far higher deposits than the traditional 5%. All of this has affected the ability of potential buyers to take the plunge and purchase a property.
The problem has been made worse by falling house prices, with house prices having fallen for eleven months in a row according to recent reports. In fact, industry officials claim that house values are now over 10% lower than they were this time last year, and most predict that they will continue to fall over the remainder of this year and next, with some predicting that they could fall by as much as 30%. This is also putting off many buyers, who do not want to pay a fortune for a property only to find that the value continues to drop and leaves them tied into negative equity.
However, a recent announcement from the government may help to breathe some life into the stagnant housing market, or so some industry officials hope. A few weeks ago the Chancellor of the Exchequer, Alistair Darling, indicated that the government was toying with the idea of suspending stamp duty for some buyers, but no confirmation was given of this.
As a result some buyers who had already put in offers on properties dropped out in the hope that a few weeks or months down the line they would be able to save thousands on stamp duty. Many industry officials were concerned that the government’s dithering over the suspension of stamp duty could make the situation even worse, and urged government officials to make a decision and announce it as quickly as possible.
Last week the government decided to do just this, and announced that there was to be a twelve month suspension on stamp duty for those purchasing a property up to the value of £175,000. For some buyers this could mean saving up to £1750, and officials hope that this will help to boost the housing market and encourage people to buy again. However, there are also concerns that the limit on stamp duty suspension means that most buyers in London will not qualify because the average house price in the area is far higher than the £175,000 threshold.
- Buyers could be encouraged through stamp duty suspension Many people cannot remember the last time things looked so bleak for the housing market, with property sales having plummeted and estate agents selling an average one property a week or less. With a range
- Is it worth waiting to save money on stamp duty? Affordability for first time buyers looking to get onto the property ladder has continued to dwindle over recent months despite the fact that house prices have been falling month on month and are now said
- Mortgage approval levels still very low say authorities There is further doom and gloom for consumers in the UK following a recent report from the British Banker's Association, which claims that mortgage lending approvals in the UK are still way down compared to
- Credit crunch does not stop asking prices from rising According to recent reports asking prices on some properties are still increasing despite the fact that property values have been falling for almost a year. Figures have revealed that the mortgage famine and falling property
- Mixed reactions on housing proposals from government The government in the UK has made a number of new proposals recently to try and kick start the slow housing market, and amongst the actions taken by the government are a suspension in stamp
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