Q. What exactly is going on with Stamp Duty?
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A. The key issue at the moment is that the so-called Stamp Duty Holiday - which the Government brought in just over a year ago as a temporary measure to help boost activity levels in the property market – is due to come to an end on December 31st. Precisely what impact this will have on the market as a whole is, of course, something only time will tell. Nevertheless, for first-time buyers and investors, it could be very significant indeed.
Back in the autumn of 2008, the Government temporarily raised the base level for Stamp Duty from £125,000 to £175,000. By taking around half of all transactions out of the net altogether, this measure was designed to breathe some much-needed life into the crucially important bottom end of the market. Originally, it was due to lapse last Spring, but in April the Government extended it to the end of the year.
What does this measure actually mean to you and me? Well, if you’re looking to buy a property for, say, £150,000, it means that you won’t pay a penny in Stamp Duty – as long as you actually complete before December 31st. Any later, and you’ll be liable to pay the Government a whopping £1,500.
Of course, it’s always possible that the Government will relent, and decide to extend this concession still further. After all, with things just starting to look up again in the housing market, many would consider it foolhardy in the extreme to risk jeopardizing that recovery. On the other hand, it has been calculated that the Stamp Duty Holiday has already cost the Government some £200million in lost revenues - and considering how cash-strapped they are, I wouldn’t bank on any last-minute reprieve.
Longer term, of course, what is really needed is a complete overhaul of the entire Stamp Duty regime. But since it has been a nice little earner for Governments of every hue down the years, I wouldn’t hold my breath on that one either – whatever happens at the next election!