The Conservatives have this morning promised to set aside £1bn in order to raise the initial Stamp Duty threshold to £250,000.
The Tories say the move would exempt almost all first-time buyers from paying the tax and completes the £4bn package of tax cuts the party says it can make during the life of the next Parliament if elected, which would be paid for by saving 2p in every pound of "waste and unnecessary bureaucracy".
Lifting of the threshold from £120,000 on domestic properties and £150,000 on commercial properties will, say the Tories, free up to half a million homebuyers a year from paying Stamp Duty, with 80% of those looking to move home paying no duty at all.
The Conservatives claim the average home buyer in England and Wales will see their tax bill reduced by £1,800, while the average home buyer in Scotland would be free of Stamp Duty completely.
Tory leader Michael Howard, said this morning the proposals would “help young people to get onto the property ladder".He continued: "And it will make it easier for young couples starting a family to buy a bigger home. Six years ago, you paid £900 on the average house in England and Wales. Under Mr Blair it’s risen to £1,800. With a Conservative Government it will be zero.”
Chancellor of the Exchequer, Gordon Brrown speaking at a Labour Party press conference this morning, reacted to the Tory propopsals by repeating Labour’s claim that the Conservative's tax and spending plans did not add up.
Brown said: "No tax announcement today can obscure the basic problem the Conservatives face – the problem Labour had in elections of the 1980s, the problem John Major had in 1992, and now the problem Conservatives face today – irresponsible and ultimately fraudulent promises on tax, spending and borrowing that do not add up and that they simply cannot afford.
“The Conservative promises include extra money beyond Labour spending announcements for additional schools, additional roads and bypasses, additional canals, rail links and hospitals – promises that go far beyond spending commitments already made at a national level.
“And these are commitments that cannot be made with any credibility by a Party committed to cut overall spending year by year and by a Party committed to the immediate priority of £4 billion tax cuts.”
The Liberal Democrats had promised in its manifesto to raise the lowest stamp duty threshold to £150,000 if elected into government.
But Leader of the Liberal Democrats Charles Kennedy and Liberal Democrat shadow education secretary Phil Willis this morning focused on student debt, by pledging to scrap tuition and top-up fees, provide grants of up to £2,000 a year to poorer students, and tackle student debt as the average student now leaves higher education with a debt of £13,051 and that figure is predicted to rise to £20,000.
“In 2001, Tony Blair promised 'we will not introduce top-up fees and have legislated to prevent them'.In 2004, he broke his promise and imposed top-up fees on students," said Kennedy.
He added: “We should not be saddling our young people with such huge debts as they start out in life. How can our young people get a foot on the housing ladder while they work to pay off their £20,000 debt? How can they plan for their pension and start saving? How can they afford to start a family and the extra costs that brings when they are paying off their student debt?
"Those who dedicate themselves to public service after university - our teachers and nurses who could often earn more in the private sector - take far longer to pay off their debts and so end up paying more in interest charges. Women, in particular, suffer under these debts, because on average women earn less than men," continued Kennedy.
Russell Jervis, managing director of Haart Estate Agents, has welcomed the Conservative's announcement saying: “The government’s decision last month to change the initial threshold to £120,000 was simply not sufficient, it was a total cop out by the Chancellor, who is doing nothing more than paying lip service to his critics.
“The Conservative's latest announcement will certainly help first-time buyers get their feet on the housing ladder as well as families that want to trade up,” he adds.But Jim Buckle, managing director of propertyfinder.com, says: "Changing the threshold to £250,000 is a crude solution and although it would go some way to addressing home buyers’ concerns, it does risk fueling house prices artificially. Marginal bands would be the most sensible option as they would put an end to the tax sledgehammer that hits home buyers as they cross each value threshold.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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