The Government's temporary stamp duty relief is not nearly radical enough to revive the ailing housing market, according to critics.
Earlier today, the Chancellor announced stamp duty land tax thresholds will rise from £125,000 to £175,000 for twelve months.
This relief will apply to transactions with an effective date on or after 3 September 2008 and before 3rd September 2009.
The move ends weeks of speculation about whether the Government would announce a stamp duty holiday to revive the ailing housing market. According to a survey for Moveme.com of 1,500 potential home movers, 83% delayed their decision to move home until the stamp duty position became clear.
However, critics argue that the move, which would save buyers between £1,250 and £1,750, is not enough to reverse the downward trend in the housing market.
Michael White, property lawyer at Dawsons LLP, says: "The stamp duty proposals announced today will not make one iota of difference to the state of the UK housing market. If there are no competitive mortgages available then knocking a maximum of £1,750 off a purchase is a complete and utter waste of time."
Some critics have also raised the issue of high house prices in the South East, and say the temporary suspension will have no effect in the region.
Keith McNelly, co-founder of Moveme.com, says: "The new stamp duty threshold will have little impact in the South East and especially the London market, where the average property sells for £348,366 according to Land Registry's latest figures.
Government must take this opportunity to completely review the archaic stamp duty tax system over the coming year, raising all the thresholds to reflect today's property values."
Later today, the Department for Communities and Local Government (DCLG) will unveil additional measures to help first time buyers into the market.
The scheme, operated by house builders and Homebuy Direct, a government agency, will allow first time buyers with a household income of £60,000 or less to borrow up to 30% of the value of a newly built home for five years.
The loan will not have to be repaid until the five-year period is up, and the Government says the loan can be extended for a fee but has not yet confirmed details.
However, the Council of Mortgage Lenders has recently issued new guidelines for new-build purchases, and incentive schemes such as Hombuy Direct may need to be revealed before a lender chooses how much to offer potential buyers.
The Conservatives criticised the plans, saying they do not amount to the economic recovery plan the Government promised, and do nothing to help families struggling with rising living costs.IFAonline
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