Hi

It seems The Sun, while first with the news about UK stamp duty, may have been slightly premature in describing it as being temporarily 'axed'. It now appears stamp duty is likely to be deferred and only for first time buyers.

Increasingly, there are calls for the government to 'do something' about the UK property market (by which we really mean the mortgage market). And it's increasingly obvious there isn't a whole lot they can do.

Certainly, if the stamp duty deferral is the best the government can do, it's obvious they are either devoid of idea or helpless.

A temporary saving of the 1% stamp duty paid on an average first-time buyer property won't go anywhere near to filling the gap left by tightened lending conditions.

I can't see this stimulating potential first time buyers to jump in - first there have to be available mortgages they can afford and second there has to be a belief that prices won't fall much further.

And there's no sign of either - not just yet, anyway.

What do others think?

Robin - I don't know if it will help the property market either. I get a bit worried that the government see themselves down in the polls and they respond by looking for popular initiatives to bring in that cost the country a lot of money.

Dithering and rumours about removing stamp duty can only make the situation worse.

Now is the time for decisive action.

It was a big mistake to let these rumours get out. All this uncertainty will make people even more inclined to wait before buying property and heap more unwanted pressure on the ailing housing market.

And for those first time buyers finding it even more difficult to get a mortgage, saving a grand or so on stamp duty won't make any difference.

I think that saving the stamp duty might be more psychological benefit than a real one. But that may have a small positive effect on the market.

Who does not know someone who drives a longer way to buy petrol at 2p cheaper than around the corner? Some people may even spend more driving there than the amount they will save by buying petrol cheaper.

Anyway, this will not stop the house price falling, as the main problems (finance availability or belief in the market) are not solved, but I would welcome this tax cut. :-)

Erico

Hi

So, now we know the details of at least one aspect of the government’s so-called rescue package for the UK property market - a temporary lifting of the stamp duty threshold by £50,000, saving buyers as much as £1,750.

The year time frame implies, I suppose, that the change will have completed its mission in 12 months, and all will be well again with the UK market, or, more specifically, with the mortgage market. That’s an interesting view; I wonder what it’s based on.

Personally, I don’t see this having much more than a miniscule effect on the market. In fact, I suspect it will do little more than earn a few headlines – and most will be of the ‘too little, too late’ variety.

It’s conceivable there will be something of a mini boost to the market as those first time buyers who were encouraged to wait on the sidelines because of the leak on the stamp duty announcement will now be inclined to buy – if they can still get the finance.

As for the other flagged aspects of the package, they also seem to be likely to be fairly ineffectual.

The scheme to allow housing associations to buy homes from people in danger of being repossessed and then rent them back to the sellers may well remove some of the increasing desperation as more people struggle to re-finance after fixed rate deals. The key aspect here is that associations will pay have to pay market rates. But it won’t re-stimulate the market.

The other plan – HomeBuy Direct - will allow up to 30% of the value of a new build to be borrowed from funds provided by the government and developer, interest free, for five years. This all seems King Canute-like.

I can’t see what it’s really designed to achieve – help first-time buyers into the market, or to re-stimulate the market by drawing in first-time buyers by providing finance that isn’t available on the free market. Why should the government do either?

The real problem is a banking one – banks are hoarding cash to pay for huge losses and until their reserves are rebuilt the mortgage lending blockage is going to stay and the property market will suffer as a result. Apart from propping up the odd bank to ensure there isn’t a complete collapse of confidence, there doesn’t seem to be much any government can do, except, like all of us, wait.

Any views?

All I know is that I would PROBABLY have bought my house much sooner if I hadn't had the stamp duty to worry about.

It would have saved me over a grand. Of course, that was in the days of much easier credit - what difference would this change have made to me now?

Probably very little...I would STILL have to have found a lender. It seems like a drop in the ocean, at best. I don't see it kick starting the market!

From a purely investment angle though - a saving of £1k plus COULD mean the difference between buying or not buying, affecting, as it does, yields etc.

I can't see this having any impact in Central London. FTBs north of Watford will benefit as will developers off-loading one (and cheaper) two bed boxes in provincial towns.

Overall I don't see it stimulating the market so much as appeasing voters in traditional Labour territory.

Barry

Surely the saving is only £500, being 1% of the £50,000 you would previously have had to pay between £125k and £175k? A drop in the ocean and a publicity stunt aimed at heading off criticism at the party conference.
Huw

Hi Huw

I think it's actually a potential £1,750 saving - 1% of the whole lot. so, if you'd bought at 175K before, it would cost you 1,750, now zero.
But , I agree with the general sentiments here: it's peanuts and will do very little - except perhaps pull down prices of property that are around 10k to 15k above the new threshold

cheers

But the rate was already nil up to £125k wasn't it? So it's only a saving on the additional £50k.
Huw