A suspension on stamp duty would create renewed confidence in the housing market, but could play into the hands of those less in need such as investors and second home owners, critics say.
Alistair Darling today hinted he is considering suspending stamp duty in a bid to kick-start the flagging housing market.
In an interview, the chancellor said he would be announcing “further measures in the autumn to help people with housing and through them the housing market”.
He refused to rule out a suggestion a temporary suspension of stamp duty on all house purchases would be the centrepiece of the government's economic recovery plan.
The Conservative Party implemented a suspension on stamp duty for eight months in 1992 on property deals up to £250,000, but critics argue it did little to help the housing crisis at the time, particularly in the short-term.
However, Charles Wasdell, director of Moveme.com, says: “[This news] will be welcomed by homebuyers across the country, as it will provide some much needed relief to those struggling to get on to or move up the property ladder.
“This is the first real sign from the Government that it is looking to take practical steps to help spearhead an economic recovery.
“If the burden of stamp duty is removed, it will create renewed confidence in the housing market, helping to halt the current downwards spiral.”
David Bexon, managing director of SmartNewHomes.com, adds: "If it is true, scrapping stamp duty over the short term is likely to entice a surge of buyers back to the market, keen to save what could potentially be £1,000s off the value of their next purchase.
"However, while this is likely to increase activity in what is currently a struggling market, we need to see this action coupled with the freeing up of mortgage finance if it is to prove a real success.”
Wasdell voices a smiliar note of caution. "By removing stamp duty on all housing transactions the Treasury would be opening the door for investors and second home owners to take advantage of the potential savings on offer, rather than just assisting those most in need,” he says.
“A more sensible approach would be to limit this stamp duty holiday to those buyers purchasing a primary residence.
“This would ensure that those who really need the help benefit, while preventing other from taking advantage of the situation.”
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